89-006

2010
111TH CONGRESS 2D SESSION
HOUSE OF REPRESENTATIVES
Rept. 111-465

Part 1

IMPLEMENTING MANAGEMENT FOR PERFORMANCE AND RELATED REFORMS TO OBTAIN VALUE IN EVERY ACQUISITION ACT OF 2010

R E P O R T

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ON

H.R. 5013

together with

ADDITIONAL VIEWS

[Including cost estimate of the Congressional Budget Office]

congress.#13

APRIL 23, 2010- Ordered to be printed

HOUSE COMMITTEE ON ARMED SERVICES
One Hundred Eleventh Congress
IKE SKELTON, Missouri, Chairman
JOHN SPRATT, South Carolina
SOLOMON P. ORTIZ, Texas
GENE TAYLOR, Mississippi
SILVESTRE REYES, Texas
VIC SNYDER, Arkansas
ADAM SMITH, Washington
LORETTA SANCHEZ, California
MIKE MCINTYRE, North Carolina
ROBERT A. BRADY, Pennsylvania
ROBERT ANDREWS, New Jersey
SUSAN A. DAVIS, California
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
JIM COOPER, Tennessee
JIM MARSHALL, Georgia
MADELEINE Z. BORDALLO, Guam
BRAD ELLSWORTH, Indiana
PATRICK J. MURPHY, Pennsylvania
HANK JOHNSON, Georgia
CAROL SHEA-PORTER, New Hampshire
JOE COURTNEY, Connecticut
DAVID LOEBSACK, Iowa
JOE SESTAK, Pennsylvania
GABRIELLE GIFFORDS, Arizona
NIKI TSONGAS, Massachusetts
GLENN NYE, Virginia
CHELLIE PINGREE, Maine
LARRY KISSELL, North Carolina
MARTIN HEINRICH, New Mexico
FRANK M. KRATOVIL, JR., Maryland
BOBBY BRIGHT, Alabama
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
DAN BOREN, Oklahoma		 HOWARD P. `BUCK' MCKEON, California
ROSCOE G. BARTLETT, Maryland
MAC THORNBERRY, Texas
WALTER B. JONES, North Carolina
W. TODD AKIN, Missouri
J. RANDY FORBES, Virginia
JEFF MILLER, Florida
JOE WILSON, South Carolina
FRANK A. LOBIONDO, New Jersey
ROB BISHOP, Utah
MICHAEL TURNER, Ohio
JOHN KLINE, Minnesota
MIKE ROGERS, Alabama
TRENT FRANKS, Arizona
BILL SHUSTER, Pennsylvania
CATHY MCMORRIS RODGERS, Washington
K. MICHAEL CONAWAY, Texas
DOUG LAMBORN, Colorado
ROB WITTMAN, Virginia
MARY FALLIN, Oklahoma
DUNCAN HUNTER, California
JOHN C. FLEMING, Louisiana
MIKE COFFMAN, Colorado
THOMAS J. ROONEY, Florida
TODD RUSSELL PLATTS, Pennsylvania
PAUL ARCANGELI, STAFF DIRECTOR

C O N T E N T S Page
Purpose and Background 21
Legislative History 23
Hearings 23
Section-by-Section Analysis 23
Section 1--Short Title 23
Section 2--Definition of Congressional Defense Committees 23
Section 3--Table of Contents 24
TITLE I--DEFENSE ACQUISITION SYSTEM 24
OVERVIEW 24
ITEMS OF SPECIAL INTEREST 25
Acquisition Process for Information Technology 25
Military Purpose Non-Developmental Items 26
Tailoring of Metrics 26
Treatment of Services Acquisition in the Federal Acquisition Regulation 27
LEGISLATIVE PROVISIONS 27
Section 101--Performance Management of the Defense Acquisition System 27
Section 102--Meaningful Consideration by Joint Requirements Oversight Council of Input from Certain Officials 28
Section 103--Performance Management for the Joint Capabilities Integration and Development System 29
Section 104--Requirements for the Acquisition of Services 29
Section 105--Joint Evaluation Task Forces 30
Section 106--Review of Defense Acquisition Guidance 30
Section 107--Requirement To Include References to Services Contracting throughout the Federal Acquisition Regulation 30
Section 108--Procurement of Military Purpose Nondevelopmental Items 31
TITLE II--DEFENSE ACQUISITION WORKFORCE 31
OVERVIEW 31
LEGISLATIVE PROVISIONS 32
Section 201--Acquisition Workforce Excellence 32
Section 202--Amendments to the Acquisition Workforce Demonstration Project 33
Section 203--Incentive Programs for Civilian and Military Personnel in the Acquisition Workforce 34
Section 204--Career Development for Civilian and Military Personnel in the Acquisition Workforce 35
Section 205--Recertification and Training Requirements 35
Section 206--Information Technology Acquisition Workforce 36
Section 207--Definition of Acquisition Workforce 36
Section 208--Defense Acquisition University Curriculum Review 36
Section 209--Cost Estimating Internship and Scholarship Programs 37
TITLE III--FINANCIAL MANAGEMENT 37
OVERVIEW 37
LEGISLATIVE PROVISIONS 38
Section 301--Incentives for Achieving Auditability 38
Section 302--Measures Required after Failure To Achieve Auditability 38
Section 303--Review of Obligation and Expenditure Thresholds 39
TITLE IV--INDUSTRIAL BASE 39
OVERVIEW 39
ITEMS OF SPECIAL INTEREST 40
Contract Payment Withholding 40
Department of Defense Utilization of Service Disabled Veteran-Owned Small Businesses 40
Multiyear Procurement Authority 41
LEGISLATIVE PROVISIONS 42
Section 401--Expansion of the Industrial Base 42
Section 402--Commercial Pricing Analysis 42
Section 403--Contractor and Grantee Disclosure of Delinquent Federal Tax Debts 42
Section 404--Independence of Contract Audits and Business System Reviews 43
Section 405--Blue Ribbon Panel on Eliminating Barriers to Contracting with the Department of Defense 44
Section 406--Inclusion of the Providers of Services and Information Technology in the National Technology and Industrial Base 44
Communications from Other Committees 44
Committee Position 46
Congressional Budget Office Estimate 46
Committee Cost Estimate 50
Compliance with House Rule XXI 50
Oversight Findings 50
General Performance Goals and Objectives 50
Constitutional Authority Statement 51
Federal Advisory Committee Statement 51
Applicability to the Legislative Branch 51
Statement of Federal Mandates 51
Record Vote 51
Changes in Existing Law Made by the Bill, as Reported 53
Additional Views 78
Additional Views of Representative K. Michael Conaway 78
Additional Views of Representative Rick Larsen 80
Additional Views of Representative James R. Langevin 81

111TH CONGRESS

Rept. 111-465

HOUSE OF REPRESENTATIVES

2d Session

Part 1

--IMPLEMENTING MANAGEMENT FOR PERFORMANCE AND RELATED REFORMS TO OBTAIN VALUE IN EVERY ACQUISITION ACT OF 2010

APRIL 23, 2010- Ordered to be printed
Mr. SKELTON, from the Committee on Armed Services, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 5013]
[Including cost estimate of the Congressional Budget Office]

SECTION 1. SHORT TITLE.

SEC. 2. DEFINITION OF CONGRESSIONAL DEFENSE COMMITTEES.

SEC. 3. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Definition of congressional defense committees.
Sec. 3. Table of contents.
TITLE I--DEFENSE ACQUISITION SYSTEM
Sec. 101. Performance management of the defense acquisition system.
Sec. 102. Meaningful consideration by Joint Requirements Oversight Council of input from certain officials.
Sec. 103. Performance management for the Joint Capabilities Integration and Development System.
Sec. 104. Requirements for the acquisition of services.
Sec. 105. Joint evaluation task forces.
Sec. 106. Review of defense acquisition guidance.
Sec. 107. Requirement to include references to services contracting throughout the Federal Acquisition Regulation.
Sec. 108. Procurement of military purpose nondevelopmental items.
TITLE II--DEFENSE ACQUISITION WORKFORCE
Sec. 201. Acquisition workforce excellence.
Sec. 202. Amendments to the acquisition workforce demonstration project.
Sec. 203. Incentive programs for civilian and military personnel in the acquisition workforce.
Sec. 204. Career development for civilian and military personnel in the acquisition workforce.
Sec. 205. Recertification and training requirements.
Sec. 206. Information technology acquisition workforce.
Sec. 207. Definition of acquisition workforce.
Sec. 208. Defense Acquisition University curriculum review.
Sec. 209. Cost estimating internship and scholarship programs.
TITLE III--FINANCIAL MANAGEMENT
Sec. 301. Incentives for achieving auditability.
Sec. 302. Measures required after failure to achieve auditability.
Sec. 303. Review of obligation and expenditure thresholds.
TITLE IV--INDUSTRIAL BASE
Sec. 401. Expansion of the industrial base.
Sec. 402. Commercial pricing analysis.
Sec. 403. Contractor and grantee disclosure of delinquent Federal tax debts.
Sec. 404. Independence of contract audits and business system reviews.
Sec. 405. Blue ribbon panel on eliminating barriers to contracting with the Department of Defense.
Sec. 406. Inclusion of the providers of services and information technology in the national technology and industrial base.

TITLE I--DEFENSE ACQUISITION SYSTEM

SEC. 101. PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM.

`CHAPTER 149--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM

`Sec.
`2545. Performance assessment of the defense acquisition system.
`2546. Audits of performance assessment.
`2547. Use of performance assessments for managing performance.
`2548. Acquisition-related functions of the Chiefs of Staff of the armed forces.

`Sec. 2545. Performance assessment of the defense acquisition system

`Sec. 2546. Audits of performance assessment

`Sec. 2547. Use of performance assessments for managing performance

`Sec. 2548. Acquisition-related functions of the Chiefs of Staff of the armed forces

`149. Performance Management of the Defense Acquisition System
2545'.

SEC. 102. MEANINGFUL CONSIDERATION BY JOINT REQUIREMENTS OVERSIGHT COUNCIL OF INPUT FROM CERTAIN OFFICIALS.

SEC. 103. PERFORMANCE MANAGEMENT FOR THE JOINT CAPABILITIES INTEGRATION AND DEVELOPMENT SYSTEM.

SEC. 104. REQUIREMENTS FOR THE ACQUISITION OF SERVICES.

SEC. 105. JOINT EVALUATION TASK FORCES.

SEC. 106. REVIEW OF DEFENSE ACQUISITION GUIDANCE.

SEC. 107. REQUIREMENT TO INCLUDE REFERENCES TO SERVICES CONTRACTING THROUGHOUT THE FEDERAL ACQUISITION REGULATION.

SEC. 108. PROCUREMENT OF MILITARY PURPOSE NONDEVELOPMENTAL ITEMS.

`Sec. 2410r. Military purpose nondevelopmental items

`2410r. Military purpose nondevelopmental items.'.

TITLE II--DEFENSE ACQUISITION WORKFORCE

SEC. 201. ACQUISITION WORKFORCE EXCELLENCE.

`Sec. 1701a. Management for acquisition workforce excellence

`1701a. Management for acquisition workforce excellence.'.

SEC. 202. AMENDMENTS TO THE ACQUISITION WORKFORCE DEMONSTRATION PROJECT.

`Sec. 1762. Demonstration project relating to certain acquisition personnel management policies and procedures

`1762. Demonstration project relating to certain acquisition personnel management policies and procedures.'.

SEC. 203. INCENTIVE PROGRAMS FOR CIVILIAN AND MILITARY PERSONNEL IN THE ACQUISITION WORKFORCE.

`Sec. 1763. Incentive programs for civilian and military personnel in the acquisition workforce

`1763. Incentive programs for civilian and military personnel in the acquisition workforce.'.

SEC. 204. CAREER DEVELOPMENT FOR CIVILIAN AND MILITARY PERSONNEL IN THE ACQUISITION WORKFORCE.

`Sec. 1722b. Special requirements for civilian employees in the acquisition field

`1722b. Special requirements for civilian employees in the acquisition field.'.

SEC. 205. RECERTIFICATION AND TRAINING REQUIREMENTS.

`Sec. 1748. Guidance and standards for acquisition workforce training

`1748. Guidance and standards for acquisition workforce training.'.

SEC. 206. INFORMATION TECHNOLOGY ACQUISITION WORKFORCE.

`Sec. 1725. Information technology acquisition positions

`1725. Information technology acquisition positions.'.

SEC. 207. DEFINITION OF ACQUISITION WORKFORCE.

SEC. 208. DEFENSE ACQUISITION UNIVERSITY CURRICULUM REVIEW.

`Sec. 1746. Defense Acquisition University'.

`1746. Defense Acquisition University.'.

SEC. 209. COST ESTIMATING INTERNSHIP AND SCHOLARSHIP PROGRAMS.

TITLE III--FINANCIAL MANAGEMENT

SEC. 301. INCENTIVES FOR ACHIEVING AUDITABILITY.

SEC. 302. MEASURES REQUIRED AFTER FAILURE TO ACHIEVE AUDITABILITY.

SEC. 303. REVIEW OF OBLIGATION AND EXPENDITURE THRESHOLDS.

TITLE IV--INDUSTRIAL BASE

SEC. 401. EXPANSION OF THE INDUSTRIAL BASE.

SEC. 402. COMMERCIAL PRICING ANALYSIS.

SEC. 403. CONTRACTOR AND GRANTEE DISCLOSURE OF DELINQUENT FEDERAL TAX DEBTS.

`Sec. 3720F. Contractor and grantee disclosure of delinquent Federal tax debts

`3720F. Contractor and grantee disclosure of delinquent Federal tax debts.'.

SEC. 404. INDEPENDENCE OF CONTRACT AUDITS AND BUSINESS SYSTEM REVIEWS.

`Sec. 204. Defense Contract Audit Agency general counsel

`204. Defense Contract Audit Agency general counsel.'.

`Sec. 2222a. Criteria for business system reviews

`2222a. Criteria for business system reviews.'.

SEC. 405. BLUE RIBBON PANEL ON ELIMINATING BARRIERS TO CONTRACTING WITH THE DEPARTMENT OF DEFENSE.

SEC. 406. INCLUSION OF THE PROVIDERS OF SERVICES AND INFORMATION TECHNOLOGY IN THE NATIONAL TECHNOLOGY AND INDUSTRIAL BASE.

PURPOSE AND BACKGROUND

The purpose of H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010, is to amend title 10, United States Code, and to establish other new statutory requirements, to improve performance and the quality of outcomes in the defense acquisition system. On March 17, 2009, Chairman Ike Skelton and then-Ranking Member John McHugh appointed a Panel on Defense Acquisition Reform from among members of the committee to carry out a comprehensive review of the defense acquisition system. The review was motivated by a general sense that the Department of Defense's (DOD) acquisition system was not responsive enough to today's mission needs, not rigorous enough in protecting taxpayers, and not disciplined enough in the acquisition of weapon systems for tomorrow's wars.

A central finding of this review was that while the nature of defense acquisition has substantially changed in the last two decades, the defense acquisition system has not kept pace. The system remains structured primarily for the acquisition of weapon systems at a time when services represent a much larger share of the Department's acquisitions. As a result, the Department's formal acquisition policy has limited application to the majority of the Department's acquisitions. Furthermore, while the Department is currently working to modernize in the `information age,' the acquisition system is particularly poorly designed for the acquisition of information technology. Even in the acquisition of weapon systems, the Department's historical strength, the system continues to generate development timeframes for major systems measured in decades, an approach which has resulted in unacceptable cost growth, negative effects on industry, and in too many cases, a failure to timely meet warfighter needs.

The acquisition of weapon systems, the acquisition of commercial goods and commodities, the acquisition of services, and the acquisition of information technology have diverse features and challenges. Across all categories of acquisition, however, significant improvements can be made in: managing the acquisition system; improving the requirements process; developing and incentivizing the highest quality acquisition workforce; reforming financial management; and getting the best from the industrial base. This bill would put in place the statutory framework needed to achieve these improvements.

For most categories of acquisition, only anecdotal information exists about instances where the system either performed well, or poorly. Even where real performance metrics currently exist, they are not sufficient. H.R. 5013 would establish a performance management program that would allow DOD's senior leaders to identify and correct problems in the defense acquisition system, and reinforce and reward success. This bill would expand the mandate of the Office of Performance Assessment and Root Cause Analysis (PARCA) to serve a performance assessment function for the acquisition system. PARCA would track organizations throughout the defense acquisition system in meeting pre-negotiated goals for acquisition performance. Organizations would see real consequences for both success and failure in meeting their goals.

In addition to instituting performance management for the acquisition system, this bill would establish a performance management approach for the requirements processes upon which the acquisition process depends. Challenges with the requirements process are a major factor in poor acquisition outcomes. Most concerning is that the requirements process for the acquisition of services, the largest category of acquisition, is almost entirely ad hoc. The process for developing requirements for the acquisition of weapon systems is overly cumbersome, but also lacking in the expertise and capacity required to truly vet joint military requirements. This bill would substantially improve both processes.

H.R. 5013 would establish the acquisition workforce as a model within the Department for more flexible personnel management that rewards success and includes accountability. The Department's Acquisition Workforce Demonstration Project and the authorities in section 1113 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84) provide a solid foundation for creating an acquisition workforce that can obtain the value the Department needs. The Department requires flexibility to efficiently hire qualified new employees, and to manage its workforce in a manner that promotes superior performance. This bill provides these tools so that the Department can develop new regulations for the civilian workforce including fair, credible, and transparent methods for hiring and assigning personnel, and for appraising and incentivizing employee performance.

Underlying the success of the defense acquisition system is the Department's financial management system. The inability to provide accurate and timely financial information prevents the Department from adequately managing its acquisition programs and from implementing true acquisition reform. The implications of poor financial management stretch beyond the Department of Defense. Indeed, given that the Department is the largest agency in the federal government, owning 86 percent of the government's assets (estimated at $4.6 trillion), it is essential that the Department maintain strong financial management and business systems. This bill would provide incentives to DOD components that are able to obtain clean audit opinions before the statutory deadline of September 30, 2017, and also imposes consequences if this deadline is not met.

H.R. 5013 also focuses on how to get the most out of the industrial base. The Department has long worked to protect those elements of the defense industrial base that are perishable and unique to the Department. The committee supports this priority. However, the committee believes that the Department can enhance competition and gain access to more innovative technology by developing measures to utilize more of the industrial base, especially small- and mid-tier businesses. The committee also believes that the Department is best served when it deals with responsible contractors. Contracting officers need access to accurate information on contractors that are known to be in violation of the law in making the determination about whether a contractor is responsible.

LEGISLATIVE HISTORY

H.R. 5013 was introduced on April 14, 2010, and referred to the Committee on Armed Services, and in addition to the Committee on Oversight and Government Reform.

On April 21, 2010, the Committee on Armed Services held a mark-up session to consider H.R. 5013, as introduced. The committee, a quorum being present, ordered reported H.R. 5013, as amended, to the House with a favorable recommendation by a record vote of 56-0.

HEARINGS

Committee consideration of the matters contained in H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010, was informed by multiple committee hearings. The committee's Panel on Defense Acquisition Reform held 14 hearings and 2 briefings on various aspects of the defense acquisition system. These hearings involved testimony from many current and former officials of the Department of Defense who are knowledgeable on acquisition matters as well as representatives of industry and of the acquisition workforce. The panel's work culminated in a hearing on March 11, 2010, with the Honorable Ashton Carter, Under Secretary of Defense for Acquisition, Technology, and Logistics, the Honorable Robert Hale, Under Secretary of Defense (Comptroller), Ms. Elizabeth A. McGrath, Acting Deputy Chief Management Officer, Department of Defense, and Mr. Shay Assad, Acting Assistant Secretary of Defense for Acquisition and Director, Defense Procurement and Acquisition Policy, on Administration perspectives on managing the defense acquisition system and the defense acquisition workforce. The witnesses provided testimony on the panel's interim findings and recommendations allowing the committee to gain the Administration's views on the matters that form the core of H.R. 5013.

SECTION-BY-SECTION ANALYSIS

The following is a section-by-section analysis of those sections of H.R. 5013, as amended, by the Committee on Armed Services.

SECTION 1--SHORT TITLE

This section would establish the short title of the bill as the `Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010.'

SECTION 2--DEFINITION OF CONGRESSIONAL DEFENSE COMMITTEES

This section would define the term `congressional defense committee' as it is defined in section 101 of title 10, United States Code. The term would include the Senate Armed Services Committee, the House Armed Services Committee, the Subcommittee on Defense of the Senate Appropriations Committee, and the Subcommittee on Defense of the House Appropriations Committee.

SECTION 3--TABLE OF CONTENTS

This section would contain the table of contents for the bill.

TITLE I--DEFENSE ACQUISITION SYSTEM

OVERVIEW

Although Department of Defense policy and the name of this title refer explicitly to a `defense acquisition system,' there is in fact very little of the unity in the system that such a term implies. The Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)) exercises direct oversight over a relatively small percentage of acquisitions, mostly major defense acquisition programs, and recently, very large service contracts. Likewise, the bulk of overarching defense acquisition policy and congressional oversight focus applies to this portion of the defense acquisition system. The rest of the system, representing a majority of acquisition spending, is largely outside the day to day purview of USD (AT&L) and many of the most well known acquisition statutes do not apply. Much of the defense acquisition system is run entirely by the military departments and is not centrally managed. Furthermore, the character of the defense acquisition system varies greatly depending on the nature of the item being acquired. Acquisition at the Department of Defense (DOD) is funded, managed, overseen, and operated according to notably different processes depending on whether the category of item being acquired is a weapon system; a commercial good or commodity; an item being acquired rapidly in response to an urgent operational need; a military-unique or commercial service; or information technology.

The diversity in the acquisition system is in many cases appropriate. It does, however, present a significant management challenge, one that the Department is often unable to meet. Two of the major purposes of this title are to create a structure flexible enough to be used in managing the entire defense acquisition system, and to manage the system to achieve specific performance goals.

The Goldwater Nichols Act (Public Law 99-433) assigned control of the acquisition system to the civilian leadership of the Department of Defense. The committee continues to support this principle, but is concerned that the perceived divide between acquisition and the responsibilities of the military service chiefs has become so wide that it hinders both the acquisition and requirements processes. This title would clarify that the military service chiefs have a role in assigning and guiding the training of military personnel in the acquisition process and in coordinating requirements with acquisition.

Obtaining consistent, realistic requirements able to serve as a basis for the acquisition process is a critical problem in the defense acquisition system. Requirements in the weapon system acquisition context are governed by the Joint Capabilities Integration and Development System (JCIDS). The committee has received significant feedback about problems with the JCIDS process and its ability to coordinate with acquisition. While the challenges in JCIDS are concerning, an even greater challenge exists in the context of requirements for the acquisition of services which are determined almost entirely in an ad hoc process. This title is intended to create a tool for improving JCIDS and requires the Department to establish a workable process for identifying, assessing, and approving requirements for the acquisition of services.

The Department's policy guidance on acquisition is found primarily in DOD Instruction (DODI) 5000.02, `Operation of the Defense Acquisition System.' DODI 5000.02 was revised in December 2008 and again in December 2009 to reflect passage of the Weapon Systems Acquisition Reform Act of 2009 (Public Law 111-23). It is in many ways an excellent document with significant improvements in the areas of weapon systems acquisition and in establishing a policy for the acquisition of services. However, the Department needs to improve the communication of its policy guidance on service contracting and reexamine DODI 5000.02 and related guidance to ensure that mandates and requirements that are particular to the acquisition of weapon systems are not being inappropriately applied to other areas of acquisition, particularly the acquisition of services and information technology. The committee also recognizes that there will be acquisitions involving one or more categories of acquisition, such as a contract involving hardware and information technology elements. The Department should ensure that its acquisition professionals have sufficient guidance and expertise in all categories of acquisition to best meet the needs of the government. The Department should also develop guidance for formally communicating information on the Department's mission needs with industry that is independent of specific acquisition program and contracts. The purpose of this dialogue would be to provide industry with the insight needed to make necessary investments in capacity, infrastructure, and technology development to meet the Department's needs. Therefore, the committee urges the Department to involve the commercial and defense industrial bases in the assessment of mechanisms to communicate information to industry. This title would require the Department to review its acquisition policy guidance to address these matters.

ITEMS OF SPECIAL INTEREST

ACQUISITION PROCESS FOR INFORMATION TECHNOLOGY

The National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84) included section 804, which called for an alternative acquisition process for information technology (IT) systems. The committee's Panel on Defense Acquisition Reform held a detailed hearing on issues in the acquisition of IT as part of its comprehensive review of the defense acquisition system.

The committee endorses the panel's IT acquisition-related findings, and encourages the Department of Defense to integrate these findings into its implementation plan for section 804. The panel's full set of findings can be found in its report, and includes recommendations that an alternative process for IT acquisition:

MILITARY PURPOSE NON-DEVELOPMENTAL ITEMS

The committee is aware of firms who develop products exclusively for the military, but accept no government research and development funding. These are typically smaller firms motivated to keep overhead costs to a minimum, much like firms competing in the commercial market. The committee notes that section 108 of this Act is intended to provide the Department of Defense with another tool to gain access to the country's total industrial base, especially smaller and non-traditional suppliers, as recommended by the Panel on Defense Acquisition Reform. The proposed military purpose non-developmental item exception to the submission of certified cost or pricing data, which is similar in effect to an existing exception for commercial items, is narrowly focused. The committee urges the Department to appropriately utilize this authority to eliminate the need for government research and development in cases where industry can and will develop its own solutions for military requirements and to speed the delivery of components and products to the warfighter.

TAILORING OF METRICS

The proposed new performance assessment system that would be established by section 101 of this Act includes a list of potential metrics. This list is illustrative of the kinds of metrics the committee intends the Department of Defense to address. The committee notes that metrics relating to contract bundling and the acquisition of technical data were added to the list by a vote of the committee. The committee has provided the Secretary of Defense with discretion in the use of these metrics so that the system retains the flexibility to tailor metrics to each element of the defense acquisition system as the section requires. The committee recognizes that some metrics could not be usefully applied across the entire defense acquisition system. However, the committee intends that these metrics should be applied where their application is relevant.

The committee also urges the Department, in implementing a performance assessment system, to include a metric or metrics relating to small business utilization wherever appropriate for elements of the defense acquisition system. As with other metrics, a metric relating to small business utilization would require each applicable element of the defense acquisition system to develop a minimum standard and an objective goal for small business utilization. The committee notes that while the totality of the goals and standards for the defense acquisition system should support the Department in achieving its overall goals for small business utilization, goals and standards for different elements of the defense acquisition system can and should vary widely from each other and from the overall Department of Defense goal for utilization of small businesses.

TREATMENT OF SERVICES ACQUISITION IN THE FEDERAL ACQUISITION REGULATION

The committee recognizes that while specific rules have been created over the last few decades on government purchases and practices, the focus in the past primarily has been on goods, hardware, and real property, which has resulted in a culture that failed to fully recognize the applicability of certain regulatory principles to services acquisitions. As highlighted in the report of the Panel on Defense Acquisition Reform, `services require at least the same level of discipline as weapon systems acquisition. Such discipline is critical for planning, requirements definition, market research, price reasonableness determinations, and project management and oversight.' While the Federal Acquisition Regulation (FAR) now includes references to the term `services', the committee believes that a more focused emphasis on services acquisition throughout the FAR would enhance and support the procurement and project management community in all aspects of the acquisition planning process. The congressional findings in section 107 of this Act would reinforce this view by noting that specific program management skills, tools, and processes need to be applied to services acquisitions. Appropriate cross references within FAR Part 37 (which specifically covers services acquisition) to other relevant parts of the FAR, as well as additional references to services throughout the remainder of the FAR, would facilitate this focus.

LEGISLATIVE PROVISIONS

SECTION 101--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM

This section would create a new chapter 149 in title 10, United States Code, entitled `Performance Management of the Defense Acquisition System', adding the following new sections: section 2545, relating to performance assessments of the defense acquisition system; section 2546, relating to audits of performance assessments; section 2547, relating to the use of performance assessments for managing performance; and section 2548, relating to the acquisition-related functions of the Chiefs of Staff of the Armed Forces. This section would direct the Secretary of Defense to implement the requirements of the new chapter 149 in a phased manner over a 2 year period beginning on the date of enactment of this Act.

Section 2545, as added by this section, would require the Secretary of Defense to ensure that all elements of the defense acquisition system are subject to regular performance assessments at least annually. It would require each service acquisition executive within the Department of Defense to create metrics for each element of the defense acquisition system within system-wide categories developed by the Secretary. Each metric would be associated with specific goals and standards. The metrics, goals, and standards would be tailored to, and negotiated with, the specific element of the defense acquisition system being assessed. The Director of the Office of Performance Assessment and Root Cause Analysis (PARCA) would be responsible for overseeing all performance assessments in the Department and this section would provide PARCA with the authority to access and retain all records necessary to fulfill this function.

Section 2546, as added by this section, would require that the performance assessments performed under the new section 2545 be subjected to periodic audits to determine their accuracy, reliability, and completeness. Audits under this section would be required to meet generally accepted government auditing standards; use a risk based approach to audit planning; and appropriately account for issues associated with auditing assessments of activities occurring in a contingency operation.

Section 2547, as added by this section, would require that the results of the performance assessments performed under the new section 2545 be used in the management of elements of the defense acquisition system through: adjustments to the size of bonus pools available to the workforce of an element of the defense acquisition system; changes in rates of promotion; awards for acquisition excellence; and changes in the scope of work assigned to the organization. Section 2547 would require that actions taken to manage the acquisition workforce under such section would be subject to existing requirements relating to labor negotiations and the issuance of regulations, as referenced in subsections (c) and (d) of section 1701a of title 10, United States Code, as added by section 201 of this Act.

Section 2548, as added by this section, would clarify that the Chiefs of Staff of the Armed Forces may assist the secretaries of their respective military departments in the following acquisition-related functions: the development of requirements; the development of measures to control requirements creep; the development of career paths in acquisition for military personnel; and the assignment and training of contracting officer representatives when such representatives are required to be members of the armed forces.

SECTION 102--MEANINGFUL CONSIDERATION BY JOINT REQUIREMENTS OVERSIGHT COUNCIL OF INPUT FROM CERTAIN OFFICIALS

This section would amend section 181 of title 10, United States Code, to add the Under Secretary of Defense for Policy to the list of civilian advisors to the Joint Requirements Oversight Council (JROC) and to allow the Chairman of the JROC to invite a combatant commander, or the deputy commander, to serve as a member of the JROC when matters related to such command are under discussion. This section would also require the Government Accountability Office (GAO) to assess whether the JROC is giving meaningful consideration to the input of: combatant commanders; the Under Secretary of Defense for Acquisition, Technology, and Logistics; and the Director of Cost Assessment and Performance Evaluation. This section would require GAO to assess the extent to which consideration is being given to input from these officials during the evaluation of joint military requirements and report its findings, along with a report on related matters, to be submitted to the Senate Committee on Armed Services and the House Committee on Armed Services by May 22, 2011, in accordance with section 105 of the Weapon System Acquisition Reform Act of 2009 (Public Law 111-23).

SECTION 103--PERFORMANCE MANAGEMENT FOR THE JOINT CAPABILITIES INTEGRATION AND DEVELOPMENT SYSTEM

This section would require the Secretary of Defense to develop a performance management program for the Joint Capabilities Integration and Development System (JCIDS) to measure performance in JCIDS and to ensure that JCIDS: delivers timely capability to the warfighter; controls requirements creep (including the growth of requirements at a level below those specified in the requirements documents considered by JCIDS); is responsive to changes in threats, emerging capabilities, and costs; and develops skilled requirements personnel. The program required by this section would be initially implemented within one year after the date of enactment of this Act and would apply to requirements documents entering JCIDS after that date. This section would require an initial report on measures of performance for JCIDS within 90 days after initial implementation and a final report on the outcomes of the performance management program four years after the date of initial implementation. This section would make continuation of the performance management program subject to the Secretary of Defense's discretion five years after the date of enactment of this Act.

SECTION 104--REQUIREMENTS FOR THE ACQUISITION OF SERVICES

This section would require each of the Chiefs of Staff of the Armed Forces to establish a process for identifying, assessing, and approving requirements for the acquisition of services. This section would require that each process provide an opportunity for combatant commanders to provide input on their joint requirements and that each process be revised to be consistent with any future guidance issued by the Chairman of the Joint Chiefs of Staff relating to joint requirements for the acquisition of services. This section would require the issuance of guidance for each military service relating to: the organization of the requirements process; the level of command responsibility required to validate requirements for each category of services acquisition; the composition of billets necessary to operate the requirements process; the training required; the relationship to doctrine; methods of obtaining input on joint requirements for services; procedures for coordinating with the acquisition process; and opportunities for strategic sourcing. This section would require that such processes be initially implemented within 180 days after the date of enactment of this Act and fully implemented at the earliest date practicable. Lastly, the committee expects that such processes be consistent with the management structure for the procurement of services, as required by section 2330 of title 10, United States Code, and to provide for appropriate interaction and communication with the senior officials designated by section 2330 as responsible for the management of acquisition of contract services.

SECTION 105--JOINT EVALUATION TASK FORCES

This section would require the Chairman of the Joint Requirements Oversight Council to designate the commander of a unified combatant command to provide a joint evaluation task force to participate in each major defense acquisition program. The task force would come from a military unit selected by the combatant commander, based on the relevance of the program to the unit's mission, and consistent with the unit's operational obligations. The task force would participate in all stages of the development and low rate initial production of the program and would provide user feedback to the resource sponsor for the program. This section would require that the task force receive administrative support from the program's resource sponsor.

SECTION 106--REVIEW OF DEFENSE ACQUISITION GUIDANCE

This section would require the Secretary of Defense to review the acquisition guidance of the Department of Defense (DOD) to consider the extent to which guidance related to weapon systems acquisition is appropriately applied to other areas of acquisition; whether long-term sustainment of weapon systems is appropriately emphasized; whether appropriate mechanisms exist to communicate information relating to DOD's mission needs to the industrial base; the extent to which earned value management (as described in the Office of Management and Budget circular A-11) should be required on non-weapon systems and whether measures of quality and technical performance should be included in the Department's implementation of earned value management; and the extent to which weapon systems processes should apply to the acquisition of information technology. This section would require that a report on the review and all actions taken, be submitted to the Senate Committee on Armed Services and the House Committee on Armed Services within 270 days of the date of enactment of this Act. Finally, the committee does not intend for this review to unnecessarily impose additional government unique requirements on the acquisition of commercial and commodity items.

SECTION 107--REQUIREMENT TO INCLUDE REFERENCES TO SERVICES CONTRACTING THROUGHOUT THE FEDERAL ACQUISITION REGULATION

This section includes congressional findings related to the complexity of services acquisition. This section would require that the Federal Acquisition Regulation (FAR) be revised to provide appropriate references to services contracting throughout the FAR within 270 days after the date of enactment of this Act.

SECTION 108--PROCUREMENT OF MILITARY PURPOSE NONDEVELOPMENTAL ITEMS

This section would create an exception to the requirement for an offer or to submit certified cost or pricing data with a bid or proposal in accordance with section 2306a of title 10, United States Code, in certain circumstances involving the acquisition of a military purpose non-developmental item (MPNDI). This section would also amend chapter 141 of title 10, United States Code, by inserting a new section 2410r, which would define a MPNDI as an item developed exclusively at private expense; that meets a validated military requirement; that can be delivered in production quantities within nine months of contract award; and has a unit cost less than $10.0 million. Additionally, section 2410r, as added by this section, would require the Secretary of Defense to issue regulations regarding the procurement of a MPNDI, specifying at a minimum, that a contract for a MPNDI be awarded utilizing competitive procedures in accordance with section 2304 of title 10, United States Code; that the contract be a firm fixed price contract; that an item developed exclusively at private expense may not have been funded in whole or in part with funding from a foreign government or through a government sponsored loan whose terms are more favorable than the prevailing market terms for a similar loan; and standards to evaluate price reasonableness in lieu of certified cost or pricing data from the contractor. The amendments to title 10 made by this section would apply with respect to contracts entered into 120 days after the date of enactment of this Act.

TITLE II--DEFENSE ACQUISITION WORKFORCE

OVERVIEW

The Department of Defense (DOD) acquisition workforce is at the heart of the Department's acquisition system. The committee recognizes, however, that the size of the acquisition workforce was significantly downsized in the post-cold war drawdown and has remained relatively steady, at the decreased levels, despite significant increases during the last decade in the number and complexity of DOD contract actions, and the higher dollar values of DOD contracts.

The committee notes that a consistent theme throughout the hearings held by the Panel on Defense Acquisition Reform was the need for a renewed emphasis on the DOD acquisition workforce, both military and civilian. As stated in the panel's report, `Ensuring that the acquisition workforce is adequately staffed, skilled and trained, and improving the workforce's quality and performance are as important as improvements to acquisition processes and structures.' This is particularly important given that the Government Accountability Office, since 1992, has identified the Department's contract management as a high-risk area and cited problems caused by an inadequate acquisition workforce, such as unmet expectations, contract overpayment, and increased exposure to potential waste, fraud and abuse.

The committee agrees with the panel's assessment that `the Department should establish the acquisition workforce as a model within the Department for more flexible personnel management that rewards success and includes accountability.' The committee notes that the authorities and flexibilities provided under section 9902 of title 5, United States Code, and the Department's Acquisition Workforce Demonstration Project provide a solid foundation for creating an acquisition workforce that will provide the value the Department needs. According to the panel's findings and recommendations, `to achieve this, the Department requires flexibility to efficiently hire qualified new employees, and to manage its workforce in a manner that promotes superior performance. Using these tools the Department can develop new regulations for the civilian workforce which include fair, credible, and transparent methods for hiring and assigning personnel, and for appraising and incentivizing employee performance.' To that end, the committee recommends legislation, elsewhere in this title, that would require the Department to develop and manage a highly skilled professional acquisition workforce. This title would build upon the original foundation for a professional acquisition workforce established pursuant to the Defense Acquisition Workforce Improvement Act, codified at chapter 87 of title 10, United States Code. It also would reinforce the management, hiring, and training flexibilities enacted last year in the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84) and codified as section 9902 of title 5, United States Code.

The panel's report also stated that `the Department's need for acquisition personnel extends beyond contracting officials to systems engineers, development planners, software engineers, cost estimators, developmental testers, product support managers, and other highly skilled professionals. The quality of the new employees is at least as important as the quantity.' Therefore, the Panel recommended in its report that the military services be given a clearer responsibility for staffing, training and rewarding their buying activities to meet performance standards, including developing individual and organizational goals to achieve cost savings and efficiency improvements.

To ensure that the Department has the most effective workforce possible, this title also would provide additional tools to the Department to rebuild its acquisition workforce. These provisions are based on the panel's recommendations that called for the development of career paths, and requirements for continuing education, including obtaining key work experiences, and periodic recertification. Finally, this title would enact recommendations made by the panel regarding the need to strengthen the information technology (IT) workforce in order to improve outcomes for IT acquisitions.

LEGISLATIVE PROVISIONS

SECTION 201--ACQUISITION WORKFORCE EXCELLENCE

This section would amend title 10, United States Code by inserting a new section 1701a, that would require the Department of Defense (DOD) to develop and manage a highly skilled professional acquisition workforce. This section would implement the recommendations of the Panel on Defense Acquisition Reform by authorizing the Secretary of Defense to develop a system focused on rewarding, when appropriate, the acquisition workforce for its excellence and contribution to mission, ensuring that the technical expertise and business skills needed to obtain best value are resident within the workforce, and managing the workforce in a manner that complements and reinforces the performance management of the defense acquisition system pursuant to section 101 of this Act.

This section would require the Department of Defense to use several existing authorities. The committee notes that the most significant of these authorities are the flexibilities provided pursuant to section 9902 of title 5, United States Code, related to performance management, hiring, and training of managers within the General Schedule (GS) system. The committee further notes that the defense acquisition demonstration project, which is extended for an additional five years elsewhere under this Act, may provide some important lessons for the Department's efforts to develop a DOD-wide performance management program within the GS system. This section also would direct the Secretary of Defense to require managers to develop individual performance plans for members of the acquisition workforce as well as appropriate procedures for due process for members of the acquisition workforce who consistently fail to meet performance standards. This section also would authorize additional actions to be taken to restore the focus on professionalizing the acquisition workforce through the development of attractive career paths, encouraging continuing education and training, and utilizing the Defense Civilian Leadership Program established under section 1112 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84). In order to facilitate the hiring for positions within the acquisition workforce, this section would allow the use of expedited security clearance processing as authorized pursuant to section 1564 of title 10, United States Code.

The committee recognizes that while the Department is aggressively moving forward with hiring new personnel within the acquisition workforce, there still may be a significant gap in personnel with relevant knowledge and experience. Therefore, this section would provide the Department with greater authority to hire highly qualified experts, pursuant to section 9903 of title 5, United States Code, for temporary leadership roles in critical positions, providing mentors to advise employees on their career paths and opportunities to advance and excel in the acquisition profession, and assist with the design of education and training programs for the acquisition workforce. This section would clarify that highly qualified experts hired by the Department could be hired on a part-time basis.

Finally, actions taken under this section would be subject to the requirements of chapter 71 of title 5, United States Code, and would be deemed an agency rule or regulation under section 7177(a)(2) of title 5, United States Code.

SECTION 202--AMENDMENTS TO THE ACQUISITION WORKFORCE DEMONSTRATION PROJECT

This section would amend title 10, United States Code, by inserting a new section 1762 that would codify the authority for the Department of Defense Acquisition Workforce Demonstration (DAWD) Project, which originally was established pursuant to section 4303 of the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104-106). The original authority was to expire on September 30, 2012. The committee recognizes that the organizations that had transitioned to the DAWD project had limited experience with the project before they were converted to the National Security Personnel System (NSPS). Now that the authority for NSPS has been repealed, pursuant to section 1113 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84), those organizations that had been in the DAWD project previously will be converted back to the project. However, the committee is aware of the stress that may be imposed on the personnel system and the individual employees if they were converted from NSPS back to the DAWD project and, within less than two years, converted to the General Schedule (GS) system. Therefore, this section would extend the authority for the project to September 30, 2017; within six months after the authority terminates, all employees within the acquisition demonstration project must be transferred to the performance management system, under the GS system, that is being developed pursuant to section 9902 of title 5, United States Code. This is intended to provide a more orderly transition for the affected employees. However, the committee intends that the extension of this authority is only for those organizations that had fully implemented a defense acquisition workforce demonstration project, pursuant to Office of Personnel Management regulations, including the issuance of a Federal Register notice that such project would be initiated.

This section also would require the Secretary of Defense to undertake an independent assessment of the project to capture the lessons learned from it and the adequacy of the project in establishing career paths, promoting training, and protecting diversity in promotion. A copy of the assessment would be provided to the Senate Committee on Armed Services, the House Committee on Armed Services, the Senate Committee on Homeland Security and Governmental Affairs, and the House Committee on Oversight and Government Reform beginning in 2011, and every two years thereafter, until the termination of the DAWD project.

SECTION 203--INCENTIVE PROGRAMS FOR CIVILIAN AND MILITARY PERSONNEL IN THE ACQUISITION WORKFORCE

This section would amend title 10, United States Code, by inserting a new section 1763 that would require the Secretary of Defense to develop an enhanced system of incentives for the encouragement of excellence in the civilian acquisition workforce, including connecting salary increases, bonuses, promotions and awards to performance and contribution to agency mission. In addition to other incentives that may be considered, this section also would direct the Secretary to use the Department of Defense Civilian Workforce Incentive Fund established pursuant to section 9902 of title 5, United States Code. This section would encourage opportunities for special career broadening experiences for high performers. The committee intends that such experiences would include broad opportunities, to include but not be limited to, educational sabbaticals, or attendance at acquisition relevant seminars or conferences both within the United States or overseas.

This section also would direct the military departments to enhance their existing incentive programs. The committee is aware that at least the Defense Logistics Agency, the Department of the Navy, and Department of the Air Force each have programs that make cash awards or personal decorations to employees that make suggestions for savings or process improvements that benefit their organization. This section would encourage the Secretary of Defense to extend such incentives to members of the military in the acquisition workforce wherever possible.

SECTION 204--CAREER DEVELOPMENT FOR CIVILIAN AND MILITARY PERSONNEL IN THE ACQUISITION WORKFORCE

This section would amend title 10, United States Code, by inserting a new section 1722b that would require the Secretary of Defense to develop attractive career paths for civilians in the acquisition workforce. The committee agrees with the assessment of the Panel on Defense Acquisition Reform that a renewed focus on career development for civilians in the acquisition workforce is necessary. Similar action already was taken for military personnel in the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Public Law 110-417). This section would require the Secretary of Defense to issue guidance to fulfill this requirement to ensure career paths exist that attract the highest quality civilian personnel, are consistent with a deliberate workforce development strategy, provide sufficient opportunities for promotion and advancement, and provide a sufficient number of trained and qualified people in the workforce. This section would require detailed information on the status of the civilian and military acquisition workforce, including information on this effort, be included in the Department's strategic human capital management plan, required by section 115b of title 10, United States Code.

This section also would amend section 1723 of title 10, United States Code, to require the Secretary to develop and support career training and development for each career path (for both civilian and military career paths), including key work experiences that allow individuals to develop in-depth knowledge in the acquisition process. Key work experiences for members of the acquisition workforce would include periodic interaction with the end-user community to develop greater knowledge and understanding of how the hardware or service provided is used in the field.

SECTION 205--RECERTIFICATION AND TRAINING REQUIREMENTS

This section would further amend section 1723 of title 10, United States Code, by requiring the Secretary of Defense to increase training for members of the acquisition workforce, with additional emphasis on the acquisition of services, long term sustainment strategies, acquisition of information technology, and rapid acquisition. With regard specifically to services acquisition, the committee is aware that while the volume of service contracting has grown, services contracting training has not kept pace. The committee recognizes that Defense Acquisition University has created the Learning Center of Excellence for Service Acquisition, but is concerned that adequate professional-level courses for services program managers continue to be lacking.

This section also would direct the Secretary to establish requirements for continuing education and periodic recertification. The committee notes that currently the Department makes its training investment up front for certification, which means that once an individual obtains a level three certification (currently, the highest certification level), that individual retains that certification for the remainder of his or her career. The committee believes that periodic recertification, not more than every five years, would add value to ensuring the professionalism of the acquisition workforce, as well as currency of their knowledge, similar to that afforded other professions that have continuing education and recertification requirements.

This section would further amend title 10, United States Code, by inserting a new section 1748 that would require the Secretary to establish fulfillment standards to supplement this training that takes into account an individual's demonstrated competencies in certain areas, as well as creating standards relating to the appropriate use of private sector contractors to provide training.

SECTION 206--INFORMATION TECHNOLOGY ACQUISITION WORKFORCE

This section would amend title 10, United States Code, by inserting a new section 1725 that would require the Secretary of Defense to strengthen the part of the acquisition workforce that specializes in information technology (IT), including establishing defined targets for billets for IT acquisition, defined career paths in IT acquisition and specific certification requirements for IT acquisition. This section would require that such actions be taken within 180 days of enactment of this Act. These actions would implement the recommendations of the Panel on Defense Acquisition Reform for the Department to `develop a plan for how to strengthen the IT acquisition workforce, especially as it increases the size of the overall acquisition workforce in the coming years.' The committee urges the Secretary to ensure the plan for the IT workforce developed in accordance with this section is tied to key attributes of any new IT acquisition system, as required by section 804 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84), and is integrated into the Department's overall acquisition workforce strategic plan.

SECTION 207--DEFINITION OF ACQUISITION WORKFORCE

This section would add a definition of the acquisition workforce to section 101 of title 10, United States Code. The acquisition workforce is defined as those designated pursuant to section 1721(a) of title 10, United States Code.

SECTION 208--DEFENSE ACQUISITION UNIVERSITY CURRICULUM REVIEW

This section would require the Under Secretary of Defense for Acquisition, Technology, and Logistics to conduct a review of the curriculum offered by the Defense Acquisition University (DAU), not later than one year following the date of enactment of this Act, to ensure its support for the training and education of members of the acquisition workforce. The review would include a focus on education and training courses developed in services contracting, long-term sustainment strategies, information technology and rapid acquisition. This section also would require the Secretary of Defense, following the review of the Under Secretary of Defense for Acquisition, Technology, and Logistics, to determine the adequacy of funding for training and education and identify any additional funding needed in the next annual strategic workforce plan required by section 115(b) of title 10, United States Code.

This section also would amend 1746 of title 10, United States Code, to require the DAU president to coordinate with the relevant professional schools and degree granting institutions within the Department of the Defense and the military departments on best practices for curriculum development. This section is intended to improve the interaction between the various educational entities within the Department related to training and education of the acquisition workforce.

SECTION 209--COST ESTIMATING INTERNSHIP AND SCHOLARSHIP PROGRAMS

This section would require the Secretary of Defense to establish internship and scholarship programs in cost estimating within 270 days after the date of enactment of this Act. As noted in the report of the Panel on Defense Acquisition Reform, courses taught on financial economics do not address the underlying sources for cost estimating. Yet sound cost estimating is essential to the acquisition process and should be considered a core acquisition function. As recommended by the panel, the committee agrees that internship and scholarship programs specifically focused on cost estimating will benefit the acquisition process. The programs established by this section would be for a four year period.

TITLE III--FINANCIAL MANAGEMENT

OVERVIEW

The committee remains concerned that the inability to provide accurate and timely financial information prevents the Department of Defense from adequately managing its acquisition programs and from implementing true acquisition reform. The Government Accountability Office (GAO) has repeatedly reported on the vulnerability of the Department's financial management systems. In its most recent update to its high-risk series, GAO found that, `Weaknesses in DOD's financial management adversely affect not only the reliability of reported financial data, but also the efficiency and effectiveness of its business operations. Transforming DOD's financial management operations to provide timely, reliable, accurate, and useful information for management operations, including financial reporting and decision making, is a significant challenge.'

Several major pieces of legislation, such as the Chief Financial Officers Act of 1990 (Public Law 101-576) and the Federal Financial Management Improvement Act of 1996 (Title VIII of Public Law 104-208) have required published audits of financial statements, reporting by auditors regarding whether the Department's financial management systems comply substantially with federal accounting standards, and other measures intended to ensure financial management systems provide accurate, reliable, and timely financial management information. In response to a congressional mandate, the Department issued its first biennial Financial Improvement and Audit Readiness Plan in December 2005, to delineate its strategy for addressing financial management challenges and achieving clean audit opinions. This 2005 report projected that 69 percent of assets and 80 percent of liabilities would be `clean' by 2009; yet in the March 2009 report, the Department projects it will have only achieved an unqualified audit on 45 percent of its assets and liabilities by 2009. The Department appears to be falling behind its original plan to achieve full compliance with the law by 2017.

In response to these concerns, in section 1003 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84), Congress adopted a more detailed statutory requirement for the Secretary of Defense to develop a plan to ensure that the financial statements of the Department are validated as ready for audit by September 30, 2017. The committee's recommendations in this title are intended to provide both organizational and personal incentives to the defense financial and business management workforce to not only meet this deadline, but to accelerate preparation of such financial statements in order to provide greater accountability and minimize fraud, waste, and abuse. Finally, the committee intends for the Department to make the necessary improvements in its own financial control systems in order to comply with the law by 2017 and notes that compliance cannot be achieved by simply passing these requirements to industry without addressing the Department's internal problems.

LEGISLATIVE PROVISIONS

SECTION 301--INCENTIVES FOR ACHIEVING AUDITABILITY

This section would require the Under Secretary of Defense (Comptroller) to extend preferential treatment, as the Under Secretary considers appropriate, to a Department of Defense component that has financial statements validated as ready for audit earlier than the current statutory deadline of September 30, 2017. Such preferential treatment may include priority in the release of appropriated funds; relief from non-statutory financial reporting; relief from departmental obligation and expenditure thresholds, the size of the bonus pools available to the component's financial and business management workforce; the rates of promotion for such workforce; awards for excellence for such workforce; and the scope of work assigned to such workforce. This section would require that actions taken by the Under Secretary be reported as part of the existing report on financial audit improvement efforts, pursuant to section 1003(b) of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84). The authority to provide such preferential treatment would expire in 2017.

SECTION 302--MEASURES REQUIRED AFTER FAILURE TO ACHIEVE AUDITABILITY

This section would require the Secretary of Defense to take corrective measures to immediately address the failure of a Department of Defense component to achieve a financial statement validated as ready for audit by September 30, 2017. This section would further require the Secretary to issue guidance within 180 days after the date of enactment of this Act detailing corrective measures to be taken, including the development of a one-year remediation plan; additional financial reporting consistent with the level of financial risk to the component; the delay of release of appropriated funds, consistent with warfighting requirements and operational needs; and specific consequences for key personnel to ensure accountability within the leadership of the component.

SECTION 303--REVIEW OF OBLIGATION AND EXPENDITURE THRESHOLDS

This section would express the sense of Congress that program managers should be encouraged to place higher priority on seeking and obtaining best value than on meeting arbitrary benchmarks for spending, and that Department of Defense leaders at every level should support this priority. This section also would require that the Chief Management Officer (CMO) of the Department of Defense review existing policy regarding obligation and expenditure benchmarks, within 180 days after the date of enactment of this Act, to ensure that such guidance does not inadvertently prevent the Department from obtaining best value. Further, this section would require the CMO, within one year after the date of enactment of this Act and in coordination with additional officials, to conduct a comprehensive review of the use and value of obligation and expenditure benchmarks. This review would consider new benchmarks or processes for tracking financial performance, including: an increased reliance on individual obligation and expenditure plans for measuring programs' financial performance; mechanisms to improve funding stability; and streamlined mechanisms for a program manager to submit an appeal for funding changes. Lastly, this section would require the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Under Secretary of Defense (Comptroller) to ensure that training for program managers and business managers emphasizes obligating and expending funds in a manner that achieves best value for the government.

TITLE IV--INDUSTRIAL BASE

OVERVIEW

The management of the defense industrial base has been a challenge for the Department dating back to the creation of the armed forces. Discussions of the industrial base often focus on retaining unique and perishable defense industrial capabilities. The committee supports this important strategic priority for the Department. However, the committee believes that priority also must be placed on giving the Department access to as much of the country's total industrial base as possible, including business firms of all sizes. The committee notes that many innovative technologies are being developed at smaller firms, and that even among larger firms, companies that are primarily commercial in nature have been technology leaders in recent years.

Federal agencies, with certain exceptions, are required to provide public notice of solicitations for contracts. However, the simple posting of a solicitation notice on a website does not represent a concerted effort to push information about potential contracts to relevant firms. The committee acknowledges that industry also bears a responsibility to develop its own business. Firms interested in doing business with the Department must cultivate relationships within industry and the Department, attend conferences and industry days, and utilize other methods to proactively gain insight into the Department's future needs, rather than waiting for a notice of solicitation. However, the committee believes that the Department of Defense would benefit by utilizing resources from the Department of Commerce, Small Business Administration, General Service Administration, and the private sector to directly notify firms in relevant industrial classifications of upcoming contract awards. A small investment in additional outreach to industry could demonstrate a large return in increased competition, lower prices, and innovation. This title is intended to impel the Department of Defense to expand the defense industrial base to increase competition and expand the Department of Defense's access to innovation. It would also expand the Department of Defense's efforts to monitor the industrial base by increasing the focus on providers of services and information technology.

While expanding the industrial base is an important goal, it supports the mission of the Department of Defense only to the extent that firms obtaining defense contracts are responsible, high-quality suppliers. The Government Accountability Office reported that in 2007, more than 60,000 federal contractors have tax debts totaling $7.7 billion. This title would provide the Department of Defense with additional tools to identify irresponsible contractors and to detect unjustifiable price escalation.

ITEMS OF SPECIAL INTEREST

CONTRACT PAYMENT WITHHOLDING

The committee concurs with the assessment of the Panel on Defense Acquisition Reform that Congress created a new obstacle to federal agencies accessing the commercial marketplace by establishing a requirement that agencies withhold three percent of all contract payments in anticipation of taxes owed to the Treasury in section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (Public Law 109-222). This requirement is currently scheduled to take effect in 2012. The committee is concerned that this requirement would place an unfair burden on tax compliant firms and will discourage such firms from bidding on defense contracts. The committee supports repeal of the three percent contract payment withholding requirement for defense contracts. The committee addresses concerns about contractors with seriously delinquent tax debts in a more targeted and effective way in section 403 of this Act.

DEPARTMENT OF DEFENSE UTILIZATION OF SERVICE DISABLED VETERAN-OWNED SMALL BUSINESSES

The committee notes that the Government Accountability Office (GAO) released a report on October 23, 2009, entitled, `Service Disabled Veteran-Owned Small Business Program: Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts' which identified $100.0 million of contracts awarded to firms under the set-aside program for Service Disabled Veteran-Owned Small Businesses (SDVOB) even though the firms did not actually qualify to participate in the program. The committee supports the SDVOB program and is concerned that the award of contracts to ineligible firms denied actual SDVOBs the opportunity to obtain these contracts. The committee notes that the Department of Veterans Affairs maintains a Vendor Information Pages database that has been designated by the Office of Federal Procurement Policy as a definitive source of information on veterans in business and urges the Department of Defense to utilize this resource in determining eligibility for SDVOB set-asides awarded by the Department. The committee directs the Secretary of Defense to review the issues identified in the GAO report and determine whether any measures should be taken by the Department to address them, and further directs the Secretary to submit a report to the Senate Committee on Armed Services and the House Committee on Armed Services on what, if any, measures the Secretary has taken or intends to take as a result of the review by April 1, 2011.

MULTIYEAR PROCUREMENT AUTHORITY

The committee concurs with the assessment of the Panel on Defense Acquisition Reform that multiyear procurement contracts are a potentially useful tool that allows the Department of Defense to reduce procurement costs and provide funding stability for defense acquisition programs. The committee also notes that multiyear procurement contracts should not be entered into frivolously, as such contracts commit taxpayers to significant liability in the event the Department changes its procurement plans and substantially alters the terms of such a contract or terminates the contract. Subsection 2306b(a) of title 10, United States Code, provides a description of the numerous factors to be considered prior to entering into a multiyear procurement contract. In particular, paragraph (1) of subsection 2306b(a) requires the potential for `substantial savings' for a multiyear contract in comparison to single-year procurements. During consideration of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), Congress debated and ultimately declined to set a statutory definition for the term `substantial savings'. Instead, the conferees stated in the conference report (H. Rept. 110-477) accompanying the National Defense Authorization Act for Fiscal Year 2008 that the term `means savings that exceed 10 percent of the total costs of carrying out the program through annual contracts, except that multiyear contracts for major systems providing savings estimated at less than 10 percent should only be considered if the Department presents an exceptionally strong case that the proposal meets the other requirements of section 2306b(a).' The committee is concerned that although Congress explicitly declined to impose criteria for `substantial savings', the Department may be rigidly applying a 10 percent savings standard as the threshold for `substantial savings'.

Therefore, the committee urges the Secretary of Defense to consider the totality of the factors required to be considered under subsection 2306b(a) of title 10, United States Code, when deciding whether to request multiyear procurement authority. Further, the committee discourages the Secretary from applying a universal standard for savings to be achieved in a multiyear procurement contract. Finally, the committee directs the Secretary to conduct an assessment of ongoing defense procurements for property to identify those procurements that meet the criteria of paragraphs (2), (3), (4), and (6) of subsection 2306b(a) of title 10 and subparagraphs (1)(C) and (1)(D) of subsection 2306b(i), United States Code, to determine which procurements may merit further evaluation to assess the benefits of a multiyear procurement contract. The committee further directs the Secretary to submit a report on the assessment to the Senate Armed Services Committee and the House Armed Services Committee by April 1, 2011.

LEGISLATIVE PROVISIONS

SECTION 401--EXPANSION OF THE INDUSTRIAL BASE

This section would require the Secretary of Defense to establish a program to expand the defense industrial base by identifying and communicating with non-traditional suppliers using tools and resources available within the federal government and in the private sector. The program would include a continuous effort to review the defense industrial base and identify markets of importance to Department of Defense. The committee notes that for the purposes of such a review, the defense industrial base should include systems integrators, suppliers of services and information technology, consistent with the revision of the definition of the national technology and industrial base required by section 406 of this Act.

SECTION 402--COMMERCIAL PRICING ANALYSIS

This section would revise and extend an existing report on commercial price trends established in section 803 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261) to identify and evaluate cases where the Department of Defense is facing unjustified price escalation for a category of commercial items. This section would require the report to be submitted annually on April 1 to the Senate Armed Services Committee and the House Armed Services Committee. The reporting requirement would expire on April 1, 2013.

SECTION 403--CONTRACTOR AND GRANTEE DISCLOSURE OF DELINQUENT FEDERAL TAX DEBTS

This section would require potential federal contractors and grantees to submit certifications as to whether they have a seriously delinquent tax debt during the bid proposal and grant application processes and to authorize the Secretary of the Treasury to verify these certifications. This section would require the Secretary of the Treasury to develop and disseminate a standard authorization form for this purpose. The requirement for disclosure would apply to individuals, partnerships, and corporations. This section defines a seriously delinquent tax debt as a debt exceeding $3,000; which has been assessed by the Secretary of the Treasury and not paid; and for which a notice of lien has been filed in public records. A seriously delinquent tax debt would not include a tax liability being paid in a timely manner in accordance with an agreement with the Department of Treasury; a liability still involved in collection due process proceedings; or an assessed liability for which no further payment is required at the end of a collection due process proceeding. This section would require the Administrator of the Office of Federal Procurement Policy, in consultation with the Secretary of the Treasury, to promulgate regulations that would also cover corporations and partnerships controlled by individuals, partnerships, or corporations with a seriously delinquent tax debt and would apply the requirements of this section to first-tier subcontractors that are a significant part of a bid proposal team. The Federal Acquisition Regulation (FAR) would be revised 90 days after such regulations are finalized.

The committee is aware that FAR part 52.209-5 currently requires an offeror to certify whether it has been notified of any delinquent federal taxes within a three-year period preceding an offer. The committee did not include a time limit on a look-back period for the disclosure required by this section. The committee intends for an offeror or grant applicant to disclose any tax liability that meets the definition of a seriously delinquent tax debt. However, the committee notes that a previous tax liability that has been paid would not constitute a seriously delinquent tax debt. Further, the committee intends for the regulations promulgated in accordance with subsection (e)(1) to apply to individuals, partnerships, or corporations that have a controlling ownership stake in an offeror or grant applicant. The committee does not intend for such regulations to compel the disclosure of a personal tax liability for an individual who is an officer or an employee of a partnership or corporation, but who has no controlling equity. Lastly, the committee intends that the FAR be revised to remove any requirement that principals without control of a partnership or corporation disclose personal tax information.

SECTION 404--INDEPENDENCE OF CONTRACT AUDITS AND BUSINESS SYSTEM REVIEWS

This section would add a new section 204 to title 10, United States Code, to provide for an independent General Counsel within the Defense Contract Audit Agency (DCAA) to serve as DCAA's chief legal officer effective on the date of enactment of this Act. This section would also add new section 2222a to title 10, United States Code, to require the Department of Defense, effective 180 days after the date of enactment of this Act, to carry out reviews of contractor business systems: in accordance with generally accepted government auditing standards; using an independent audit team; using risk-based audit planning; and by performing testing on a representative sample sufficient to fully validate the integrity of the systems concerned. This section would further require the Secretary of Defense to issue guidance within 180 days of the date of enactment of this Act relating to contract audits that are not business system reviews. Such guidance should require contract audits to comply with generally accepted government auditing standards; establish guidelines for discussions of audit scope with the contractor; provide for withholding of contract payments when necessary to compel the submission of documentation; and require that the results of contract audits be shared with other federal agencies upon request without reimbursement.

SECTION 405--BLUE RIBBON PANEL ON ELIMINATING BARRIERS TO CONTRACTING WITH THE DEPARTMENT OF DEFENSE

This section would require the Secretary of Defense to establish a panel consisting of owners of large and small businesses that are not traditional defense suppliers to formulate recommendations on eliminating barriers to contracting with the Department of Defense and its supply centers. The panel would consist of a total of nine members, three members appointed by the secretaries of each of the military departments. The appointments would be made within 180 days of the date of enactment of this Act. This section would require the panel to submit a report to Congress within one year of the date of enactment of this Act.

SECTION 406--INCLUSION OF THE PROVIDERS OF SERVICES AND INFORMATION TECHNOLOGY IN THE NATIONAL TECHNOLOGY AND INDUSTRIAL BASE

This section would insert references to services and information technology in several places in chapter 148 of title 10, United States Code, which relates to the National Technology and Industrial Base, including: the definition of the industrial base; the national security objectives for the industrial base; assessments of the industrial base; and industrial base policy. This section would also add references to integration as an important industrial capability.

COMMUNICATIONS FROM OTHER COMMITTEES

House of Representatives,

Committee on Oversight and Government Reform,

Washington, DC, April 22, 2010.

Hon. IKE SKELTON,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: I am writing about H.R. 5013, the `Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010', which the Committee on Armed Services ordered reported on April 21, 2010.

I appreciate your efforts to consult with the Committee on Oversight and Government Reform regarding those provisions of H.R. 5013 that fall within the Oversight Committee's jurisdiction. These provisions involve the federal workforce and federal acquisition policy.

In the interest of expediting consideration of H.R. 5013, the Oversight Committee will not object to its consideration in the House. I would, however, request your support for the appointment of conferees from the Oversight Committee should H.R. 5013 or a similar Senate bill be considered in conference with the Senate. Moreover, this letter should not be construed to prejudice the Oversight Committee's jurisdictional interest or prerogatives in the subject matter of H.R. 5013, or any other similar legislation.

I request that you include our exchange of letters on this matter in the Congressional Record during consideration of this legislation on the House floor.

With warm regards, I am

Sincerely,

EDOLPHUS TOWNS,

Chairman.

-

House of Representatives,

Committee on Armed Services,

Washington, DC, April 23, 2010.

Hon. EDOLPHUS TOWNS,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: Thank you for your letter regarding your Committee's jurisdictional interest in H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010.

I appreciate your willingness to support expediting floor consideration of this important legislation. I acknowledge that H.R. 5013 contains provisions under the jurisdiction of the Committee on Oversight and Government Reform. I understand and agree that your willingness to waive further consideration of the bill is without prejudice to your Committee's jurisdictional interests in this or similar legislation in the future. In the event a House-Senate conference on this or similar legislation is convened, I would support your request for an appropriate number of conferees.

I will include a copy of your letter and this response in the Congressional Record in the debate on the bill. Thank you for your cooperation as we work towards enactment of this legislation.

Very truly yours,

IKE SKELTON,

Chairman.

-

House of Representatives,

Committee on Ways and Means,

Washington, DC, April 21, 2010.

Hon. IKE SKELTON,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: Thank you for working with the Committee on Ways and Means (`Committee') on H.R. 5013, the `Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010.' As you know, section 403 of H.R. 5013 is of jurisdictional interest to the Committee as it would require tax return information to be supplied by the Internal Revenue Service (`IRS').

Generally, tax return information is confidential. However, Section 6103(c) of the Internal Revenue Code permits the Secretary of the Treasury to disclose the tax return information of a taxpayer to such person as the taxpayer designates. The Committee continues to monitor the expanding IRS workload and remains concerned about programs that greatly increase the agency's workload outside of its core mission. In calendar year 2009, the IRS made nearly 11,000 tax disclosures under section 6103(c). It is unknown how many additional disclosures will be made under H.R. 5013. As such, the Committee worked with the Armed Services Committee to develop a provision that is administrable by the IRS. The Committee remains committed to ensuring that any additional responsibilities imposed on the IRS do not strain agency resources and welcomes the opportunity to re-evaluate this provision in the future.

As we have discussed, this exchange of letters will be placed in the Committee Report on H.R. 5013 and inserted in the Congressional Record as part of the consideration of this legislation in the House. Thank you for the cooperative spirit in which you have worked with the Committee regarding this matter.

Sincerely,

Sander M. Levin,

Chairman.

-

House of Representatives,

Committee on Armed Services,

Washington, DC, April 23, 2010.

Hon. Sander Levin,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: Thank you for your letter regarding H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010. I agree that the Committee on Ways and Means has valid jurisdictional claims to certain provisions in this important legislation, and I am most appreciative of your decision not to schedule a mark-up of this bill in the interest of expediting consideration. I agree that by agreeing to waive consideration of certain provisions of the bill, the Committee on Ways and Means is not waiving its jurisdiction over these matters.

This exchange of letters will be included in the committee report of the bill and inserted in the Congressional Record as part of consideration of the bill in the House. Thank you for your cooperation as we work towards enactment of this legislation.

Very truly yours,

Ike Skelton,

Chairman.

COMMITTEE POSITION

On April 21, 2010, the Committee on Armed Services, a quorum being present, ordered reported H.R. 5013, as amended, to the House with a favorable recommendation by a record vote of 56-0.

CONGRESSIONAL BUDGET OFFICE ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the House of Representatives, the cost estimate prepared by the Congressional Budget Office and submitted pursuant to section 402 of the Congressional Budget Act of 1974 is as follows:

U.S. Congress,

Congressional Budget Office,

Washington DC, April 23, 2010.

Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is David Newman.

Sincerely,

Douglas W. Elmendorf,

Director.

Enclosure.

H.R. 5013--Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010

Summary: H.R. 5013 would require the Department of Defense (DoD) to use performance management techniques to improve the defense acquisition system and the acquisition workforce. The bill also would require new standards and techniques for training and rewarding that workforce.

CBO estimates that implementing H.R. 5013 would cost about $250 million over the 2011-2015 period, assuming the appropriation of the necessary amounts. That estimate reflects the direct costs of implementing H.R. 5013. Although the bill might yield improvements in the efficiency and effectiveness of DoD's acquisition system, CBO has no basis for determining whether such improvements would occur or to what extent they might result in savings to the government to offset some or all of the above implementation cost.

Pay-as-you-go procedures do not apply to this legislation because it would not affect direct spending or revenues.

H.R. 5013 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would not affect the budgets of state, local, or tribal governments.

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 5013 is shown in the following table. The costs of this legislation fall within budget function 050 (national defense). 



--------------------------------------------------------------------------------------------------------------------


                                             By fiscal year, in millions of dollars--                               


                                                                                 2011 2012 2013 2014 2015 2011-2015 


--------------------------------------------------------------------------------------------------------------------


CHANGES IN SPENDING SUBJECT TO APPROPRIATION                                                                        


Performance Management and Assessments:                                                                             


Estimated Authorization Level                                                       4    8    8    8    9        37 


Estimated Outlays                                                                   3    8    8    8    9        36 


Increased Bonuses:                                                                                                  


Estimated Authorization Level                                                       0    7    7    7    7        28 


Estimated Outlays                                                                   0    7    7    7    7        28 


Training and Recertification:                                                                                       


Estimated Authorization Level                                                      12   23   45   45   45       170 


Estimated Outlays                                                                  10   21   42   45   45       163 


Scholarships for Cost Estimators:                                                                                   


Estimated Authorization Level                                                       0    2    3    4    5        14 


Estimated Outlays                                                                   0    2    3    4    5        14 


General Counsel:                                                                                                    


Estimated Authorization Level                                                       1    1    1    1    1         5 


Estimated Outlays                                                                   1    1    1    1    1         5 


Total Changes:                                                                                                      


  Estimated Authorization Level                                                    17   41   64   65   67       254 


  Estimated Outlays                                                                14   39   61   65   67       246 


--------------------------------------------------------------------------------------------------------------------


Basis of estimate: For this estimate, CBO assumes that H.R. 5013 will be enacted near the start of fiscal year 2011 and that the estimated authorization amounts will be appropriated starting in that year.

TITLE I--PERFORMANCE MANAGEMENT AND ASSESSMENTS


Section 101 would require DoD to establish performance metrics and specific goals for the defense acquisition system and would require the Office of Performance Assessment and Root Cause Analysis (PARCA) to assess whether those metrics and goals were being achieved. PARCA was established in May 2009, and under current law, will grow to a staff of about 30 people that will assess the performance of the acquisition system in developing and procuring major weapon systems. Under section 101, PARCA's assessment responsibilities would expand to other areas such as the acquisition of information technology systems and of contracts for services. On the basis of information from DoD, CBO estimates that accomplishing those additional oversight responsibilities could require another 25 personnel. CBO expects those additional personnel would be hired over the 2011-2012 period at a cost of $3 million in 2011 and $36 million over the 2011-2015 period.

TITLE II--THE DEFENSE ACQUISITION WORKFORCE


Title II includes several provisions that would require DoD to improve the skills and performance of the acquisition workforce.

Increased Bonuses. Under section 203, DoD would be required to develop an enhanced system of incentives to encourage excellence in and improve the performance of the acquisition workforce. Such incentives include providing attractive career paths for acquisition personnel, tying promotions to accomplishments, and connecting bonuses and awards to personnel performance and agency outcomes. It would direct DoD to extend such incentives to military personnel to the extent possible. CBO expects that such a system could result in the payment of additional bonuses. In 2008, the last year for which such data is available, DoD paid an average of about $1,000 in bonuses for each DoD civilian. Because it would take time to develop performance standards and the criteria to connect those standards to enhanced bonus payments, such payments probably would not begin before 2012. Assuming bonuses then increased modestly (for example, by about 5 percent), the 136,000-person acquisition workforce could receive additional payments of $7 million in 2012 and $28 million over the 2012-2015 period, assuming appropriation of the necessary amounts.

Training and Recertification. Section 205 would require that DoD provide more training for the defense acquisition workforce and would institute a requirement for periodic recertification of acquisition personnel.

The bill would direct DoD to provide additional training on the acquisition of services and information technology systems, and on the use of rapid acquisition authorities. To meet that directive, the Defense Acquisition University would need to develop and deliver three new curricula for those subjects consisting of three online courses each (one for entry-level personnel, one for mid-career personnel, and one for senior management) at a total cost of about $5 million per year, CBO estimates.

Under section 205, acquisition personnel would be required to recertify their qualifications every five years and that recertification process would require attendance at one resident course and one online course, CBO estimates. Some personnel would advance to the next level of acquisition workforce certification, rather than recertify at their current level. Others would not recertify because of noncompliance or attrition from the workforce. CBO estimates that about 25 percent of the acquisition workforce would pursue recertification every five years at an annual cost of about $40 million. CBO expects that the recertification process would not begin in full until 2013 to allow time for the development of course materials.

In total, additional training for and recertification of acquisition workforce personnel would cost $10 million in 2011 and $163 million over the 2011-2015 period, assuming appropriation of the necessary amounts.

Scholarships for Cost Estimators. Title 2 also would direct DoD to establish a program to provide scholarships and internships in cost estimating for acquisition workforce personnel. CBO estimates that DoD would provide scholarships of around $15,000 annually for masters degree programs to 100 students in 2012, and to 250 students a year by 2015. Such a program would cost $2 million in 2012 and $14 million over the 2012-2015 period, CBO estimates.

TITLE IV--EXPANSION AND ASSESSMENT OF THE INDUSTRIAL BASE


Title IV includes provisions to expand the base of companies and industries that supply goods and services to DoD, and to improve the way that those industries are monitored.

General Counsel's Office. Section 404 would establish a dedicated office of the general counsel for the Defense Contract Audit Agency at a cost of $1 million per year and a total of $5 million over the 2011-2015 period, CBO estimates.

Pay-as-you-go considerations: None.

Intergovernmental and private-sector impact: H.R. 5013 contains no intergovernmental or private-sector mandates as defined in UMRA and would not affect the budgets of state, local, or tribal governments.

Estimate prepared by: Federal Costs: David B. Newman. Impact on State, Local, and Tribal Governments: Burke Doherty. Impact on the Private Sector: Elizabeth Bass.

Estimate approved by: Theresa Gullo, Deputy Assistant Director for Budget Analysis.

COMMITTEE COST ESTIMATE


Pursuant to clause 3(d) of rule XIII of the Rules of the House of Representatives, the committee generally concurs with the estimate as contained in the report of the Congressional Budget Office.

COMPLIANCE WITH HOUSE RULE XXI


H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010, does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in clause 9 of rule XXI.

OVERSIGHT FINDINGS


With respect to clause 3(c)(1) of rule XIII of the Rules of the House of Representatives, the committee reports that the findings and recommendations of the committee, based on oversight activities pursuant to clause 2(b)(1) of rule X, are incorporated in the descriptive portions of this report.

With respect to clause 3(c)(2) of rule XIII of the Rules of the House of Representatives, this legislation does not include any new spending or credit authority, nor does it provide for any increase or decrease in tax revenues or expenditures.

With respect to clause 3(c)(4) of rule XIII of the Rules of the House of Representatives, the bill does not authorize specific program funding.

GENERAL PERFORMANCE GOALS AND OBJECTIVES


In compliance with clause 3(c)(4) of rule XIII of the Rules of the House of Representatives, the goal of H.R. 5013 is to overhaul the defense acquisition system to clean up waste, fraud, and abuse through the following four objectives: (1) introducing real accountability standards in the acquisition process; (2) improving the management of the acquisition workforce; (3) reforming the Department of Defense's financial management; and (4) expanding and strengthening the industrial base.

To introduce real accountability standards in the acquisition process, this bill would require the Department of Defense to apply performance management to the defense acquisition system, create metrics with specific goals and standards, better manage requirements for weapons, and create a requirements process for the acquisition of services, and establish a joint evaluation task force to bring a greater operational perspective to acquisition.

To improve the management of the acquisition workforce, this bill would require the Department of Defense to develop and manage a highly skilled, performance-based workforce focused on creating incentives for and rewarding excellence. It would require the Department to develop attractive career paths for acquisition personnel, increase training opportunities and recertification requirements, and strengthen the information technology portion of the workforce.

To reform the Department of Defense's financial management system, the bill would require the Department to develop meaningful consequences for success and failure in financial management in order to achieve a clean audit by September 2017, and encourage program managers to place a higher priority on achieving best value rather than meeting arbitrary benchmarks for spending.

To expand and strengthen the industrial base, this bill would require the Secretary of Defense to establish a program that would identify and communicate with non-traditional suppliers and continually review the industrial base and identify markets of importance. It would create a blue ribbon panel of businesses to provide recommendations for eliminating barriers to working with the Department. Additionally, it would require federal contractors to disclose any seriously delinquent tax debt and require the Department of Defense to review contractor business systems using an independent audit team.

CONSTITUTIONAL AUTHORITY STATEMENT


Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House of Representatives, the committee finds the authority for this legislation in Article I, Section 8 of the United States Constitution.

FEDERAL ADVISORY COMMITTEE STATEMENT


The committee finds that this legislation establishes or authorizes the establishment of an advisory committee within the definition of 5 U.S.C. App., section 5(b).

APPLICABILITY TO THE LEGISLATIVE BRANCH


The committee finds that this legislation does not relate to the terms and conditions of employment or access to public services or accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act (Public Law 104-1).

STATEMENT OF FEDERAL MANDATES


Pursuant to section 423 of Public Law 104-4, this legislation contains no federal mandates with respect to state, local, and tribal governments, nor with respect to the private sector. Similarly, the bill provides no unfunded federal intergovernmental mandates.

RECORD VOTE


In accordance with clause 3(b) of rule XIII of the Rules of the House of Representatives, a record vote was taken with respect to the committee's consideration of H.R. 5013. The record of this vote is included in this report.

The committee ordered reported H.R. 5013, as amended, to the House with a favorable recommendation by a record vote of 56-0, a quorum being present.

Insert offset folio 62 here 465P1.001

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED




TITLE 10, UNITED STATES CODE


Subtitle A--General Military Law




PART I. ORGANIZATION AND GENERAL MILITARY POWERS

Chapter
Sec.


1.

Definitions

101

* * * * * * *

PART IV. SERVICE, SUPPLY, AND PROCUREMENT

131.

Planning and Coordination

2201

* * * * * * *

149.

Performance Management of the Defense Acquisition System

2545



* * * * * * *

PART I--ORGANIZATION AND GENERAL MILITARY POWERS


* * * * * * *

CHAPTER 1--DEFINITIONS


Sec. 101. Definitions






* * * * * * *



* * * * * * *

CHAPTER 7--BOARDS, COUNCILS, AND COMMITTEES


* * * * * * *

Sec. 181. Joint Requirements Oversight Council




* * * * * * *





* * * * * * *







* * * * * * *











* * * * * * *

CHAPTER 8--DEFENSE AGENCIES AND DEPARTMENT OF DEFENSE FIELD


* * * * * * *

SUBCHAPTER II--MISCELLANEOUS DEFENSE AGENCY MATTERS




Sec

201. Certain intelligence officials: consultation and concurrence regarding appointments; evaluation of performance.

* * * * * * *

204. Defense Contract Audit Agency general counsel.



* * * * * * *

Sec. 204. Defense Contract Audit Agency general counsel












* * * * * * *

PART II--PERSONNEL


* * * * * * *

CHAPTER 87--DEFENSE ACQUISITION WORKFORCE


SUBCHAPTER I--GENERAL AUTHORITIES AND RESPONSIBILITIES




Sec.

1701. Management policies.

1701a. Management for acquisition workforce excellence.



* * * * * * *

Sec. 1701a. Management for acquisition workforce excellence










































* * * * * * *

SUBCHAPTER II--DEFENSE ACQUISITION POSITIONS




Sec

1721. Designation of acquisition positions.

* * * * * * *

1722b. Special requirements for civilian employees in the acquisition field.

* * * * * * *

1725. Information technology acquisition positions.



* * * * * * *

Sec. 1722b. Special requirements for civilian employees in the acquisition field




























Sec. 1723. General education, training, and experience requirements


















* * * * * * *

Sec. 1725. Information technology acquisition positions
















* * * * * * *

SUBCHAPTER IV--EDUCATION AND TRAINING




Sec

1741. Policies and programs: establishment and implementation.

* * * * * * *

 [Struck out->][ 1746. Defense acquisition university structure. ][<-Struck out] 

1746. Defense Acquisition University.

* * * * * * *

1748. Guidance and standards for acquisition workforce training.



* * * * * * *

 [Struck out->][ Sec. 1746. Defense acquisition university structure ][<-Struck out]


Sec. 1746. Defense Acquisition University




* * * * * * *



* * * * * * *

Sec. 1748. Guidance and standards for acquisition workforce training






SUBCHAPTER V--GENERAL MANAGEMENT PROVISIONS




Sec.

1761. Management information system.

1762. Demonstration project relating to certain acquisition personnel management policies and procedures.

1763. Incentive programs for civilian and military personnel in the acquisition workforce.



* * * * * * *

Sec. 1762. Demonstration project relating to certain acquisition personnel management policies and procedures






































































Sec. 1763. Incentive programs for civilian and military personnel in the acquisition workforce














* * * * * * *

PART IV--SERVICE, SUPPLY, AND PROCUREMENT




Chapter
Sec.


131.

Planning and Coordination

2201

* * * * * * *

149.

Performance Management of the Defense Acquisition System

2545



* * * * * * *

CHAPTER 131--PLANNING AND COORDINATION




Sec.

2201. Apportionment of funds: authority for exemption; excepted expenses.

* * * * * * *

2222a. Criteria for business system reviews.



* * * * * * *

Sec. 2222a. Criteria for business system reviews














* * * * * * *

CHAPTER 137--PROCUREMENT GENERALLY


* * * * * * *

Sec. 2306a. Cost or pricing data: truth in negotiations




















* * * * * * *

CHAPTER 141--MISCELLANEOUS PROCUREMENT PROVISIONS




Sec

2381. Contracts: regulations for bids.

* * * * * * *

2410r. Military purpose nondevelopmental items.



* * * * * * *

Sec. 2410r. Military purpose nondevelopmental items








































* * * * * * *

CHAPTER 148--NATIONAL DEFENSE TECHNOLOGY AND INDUSTRIAL BASE, DEFENSE REINVESTMENT, AND DEFENSE CONVERSION


* * * * * * *

SUBCHAPTER I--DEFINITIONS


Sec. 2500. Definitions






* * * * * * *



* * * * * * *





* * * * * * *



SUBCHAPTER II--POLICIES AND PLANNING


Sec. 2501. National security objectives concerning national technology and industrial base








* * * * * * *



* * * * * * *



* * * * * * *







* * * * * * *

Sec. 2505. National technology and industrial base: periodic defense capability assessments








* * * * * * *



* * * * * * *

Sec. 2506. Department of Defense technology and industrial base policy guidance




* * * * * * *

CHAPTER 149--PERFORMANCE MANAGEMENT OF THE DEFENSE ACQUISITION SYSTEM




Sec.

2545. Performance assessment of the defense acquisition system.

2546. Audits of performance assessment.

2547. Use of performance assessments for managing performance.

2548. Acquisition-related functions of the Chiefs of Staff of the armed forces.



Sec. 2545. Performance assessment of the defense acquisition system




































































Sec. 2546. Audits of performance assessment












Sec. 2547. Use of performance assessments for managing performance














Sec. 2548. Acquisition-related functions of the Chiefs of Staff of the armed forces
























* * * * * * *

-

SECTION 105 OF THE WEAPON SYSTEM ACQUISITION REFORM ACT OF 2009


SEC. 105. ROLE OF THE COMMANDERS OF THE COMBATANT COMMANDS IN IDENTIFYING JOINT MILITARY REQUIREMENTS.




* * * * * * *

























* * * * * * *

-

TITLE 5, UNITED STATES CODE


* * * * * * *

PART III--EMPLOYEES


* * * * * * *

SUBPART I--MISCELLANEOUS


* * * * * * *

CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM


* * * * * * *

Sec. 9903. Attracting highly qualified experts








* * * * * * *

-

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1996


DIVISION D--FEDERAL ACQUISITION REFORM


* * * * * * *

TITLE XLIII--ADDITIONAL REFORM PROVISIONS


* * * * * * *

 [Struck out->][ SEC. 4308. DEMONSTRATION PROJECT RELATING TO CERTAIN PERSONNEL MANAGEMENT POLICIES AND PROCEDURES. ][<-Struck out]


































* * * * * * *

-

SECTION 853 OF THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1998


(Public Law 105-85)


 [Struck out->][ SEC. 853. GUIDANCE AND STANDARDS FOR DEFENSE ACQUISITION WORKFORCE TRAINING REQUIREMENTS. ][<-Struck out]




-

STROM THURMOND NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1999


DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS


* * * * * * *

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


* * * * * * *

SEC. 803. DEFENSE COMMERCIAL PRICING MANAGEMENT IMPROVEMENT.




* * * * * * *



























* * * * * * *

-

TITLE 31, UNITED STATES CODE


* * * * * * *

Subtitle III--FINANCIAL MANAGEMENT


* * * * * * *

CHAPTER 37--CLAIMS




SUBCHAPTER I--GENERAL

Sec.

3701. Definitions and application.

* * * * * * *

SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT

* * * * * * *

3720F.  Contractor and grantee disclosure of delinquent Federal tax debts.



* * * * * * *

SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT


* * * * * * *

Sec. 3720F. Contractor and grantee disclosure of delinquent Federal tax debts






























































* * * * * * *

ADDITIONAL VIEWS


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ADDITIONAL VIEWS OF REPRESENTATIVE K. MICHAEL CONAWAY


I strongly support H.R. 5013. It will be instrumental in improving the full range of the defense acquisition system and I am particularly pleased that the measure takes bold steps towards improving financial management within the Department of Defense. The bill is the culmination of a year's worth of effort by the Committee's Panel on Defense Acquisition Reform, established by Chairman Skelton and former Ranking Member McHugh in March, 2009. The members of the panel, led by Chairman Rob Andrews, approached their work in a nonpartisan basis and delivered a comprehensive report. I am pleased to have been associated with this endeavor and thank the Chairman and Ranking Member McKeon for acting so quickly to translate the Panel's recommendations into legislation.

I believe this bill will go a long way to improving the way we measure value in acquisition, creating a more responsive requirements process, managing elements of the acquisition system other than major weapon systems, and sustaining the acquisition workforce. But this bill also plays a critical role in improving the financial management practices of the Department of Defense (DOD) by incentivizing the Department to obtain an unqualified audit opinion. The publication of a clean audit of DOD would finally give the American people confidence that their tax dollars are being accounted for and spent wisely in the defense of this great nation.

Since 1990, there has been a requirement for the Federal Government to publish audited financial statements. But the Federal Government has not complied. A large share of the responsibility for this circumstance rests with DOD. The Department of Defense is the largest agency in the Federal Government, owning 86 percent of the Government's assets, estimated at $4.6 trillion. Over the last two decades millions of dollars have been spent by DOD in the quest to obtain auditable financial statements. It will not be an easy task, but it is possible and it is necessary to implement the financial control systems necessary to generate auditable data. This bill ensures that DOD is not held to a separate standard from public business and the rest of government.

The reliability of financial data is crucial to improve acquisition outcomes. Without understanding where the Department's money is being spent or understanding what assets it owns, there will never be any accountability for acquisition costs or new requirements. Perhaps every dime they spend is being well spent. But we will never know and neither will DOD, unless financial accountability becomes a priority for the Department.

If correctly implemented, this timely legislation will allow America's tax dollars to be stretched further by yielding greater savings and will have a substantial impact on reducing waste, fraud and abuse.

I applaud the Panel and the House Armed Services Committee for adopting these recommendations and encourage each of the components of the Department of Defense to take full advantage of the incentives provided in this bill to accelerate the publication of auditable financial statements.

K. MICHAEL CONAWAY.

ADDITIONAL VIEWS OF REPRESENTATIVE RICK LARSEN


Mr. Chairman, I strongly support the IMPROVE Acquisition Act (H.R. 5013) and the efforts of the House Armed Services Committee and Defense Acquisition Reform Panel to ensure that the Department of Defense is spending taxpayer dollars wisely. I would like to thank you, Ranking Member McKeon, Congressman Andrews, and Congressman Mike Conaway for all of your diligent work in drafting this legislation.

We are all aware that many major systems purchased by the Department of Defense have experienced cost overruns and delays; the Government Accountability Office has found that 95 major weapons programs were a combined $295 billion over-budget and on average 21 months behind schedule. This is unacceptable.

Last year, Congress passed and the President signed into law the Weapon Systems Acquisition Reform Act, which addresses deep-seated and systemic problems in how we procure major weapons systems. This law requires the Department of Defense to provide more realistic estimates of how much weapons will cost and punish those programs that are failing to meet schedule and cost goals. This law also demands additional focus during the early stages of weapons development, when small program changes can have major long-term consequences. When it comes to defense procurement, an ounce of oversight is worth a pound of cure.

While the Weapon Systems Acquisition Reform Act centered on the problems associated with acquiring major weapons systems, which comprise only about 20% of the Department of Defense's acquisition budget, the IMPROVE Acquisition Act builds on this work and focuses on making sure that the remaining 80% of acquisition dollars are providing the best value for taxpayers. This legislation will require the Department of Defense to strengthen its acquisition workforce, ensure accountability in its financial management system, and responsibly expand the industrial base to foster competition that benefits taxpayers and service members alike. I encourage my colleagues in the Senate to consider similar legislation to drive cost savings for taxpayers and achieve better results for our men and women in uniform.

I recognize that the hard work of reforming defense acquisition does not end with this legislation. The House Armed Services Committee must continue to engage in active oversight to ensure that taxpayer dollars are well spent and our military service members have access to the weapons and equipment they need to do their job. I look forward to working with you and other members of the Committee to achieve these goals.

RICK LARSEN.

ADDITIONAL VIEWS OF REPRESENTATIVE JAMES R. LANGEVIN


I would like to express my support for passage of H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act of 2010. This legislation reflects the hard work of the Committee's Acquisition Reform Panel and goes a long way to reforming our defense acquisition system to better serve and protect our nation. Due to unavoidable circumstances, I regrettably missed casting a vote in favor of the bill in the Committee. I look forward to supporting it once it is considered on the floor of the House of Representatives.

JAMES R. LANGEVIN.