Sec. 834. Improved life cycle cost control
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Section 804(c)(3) of the National Defense Authorization Act for Fiscal Year 2016 ( Public Law 114–92 ; 10 U.S.C. 2302 note) is amended— in subparagraph (C), by striking ; and and inserting a semicolon; in subparagraph (D), by striking the period at the end and inserting ; and ; and by adding at the end the following new subparagraph: a process for identifying and exploiting opportunities to use the rapid fielding pathway to reduce total ownership costs. . Section 805(2) of such Act ( Public Law 114–92 ; 10 U.S.C. 2302 note) is amended by inserting life cycle cost management, after budgeting, .
Section 883(e) of such Act ( Public Law 114–92 ; 10 U.S.C. 2223a note) is amended— in paragraph (7), by striking ; and and inserting a semicolon; in paragraph (8), by striking the period at the end and inserting ; and ; and by adding at the end the following new paragraph: policies to maximize use of fixed-price contracting elements and ability to implement tradeoffs among total cost of ownership, schedule, and performance. . Chapter 144 of title 10, United States Code, is amended by adding at the end the following new section:
Following the earliest of
(i)five years after declaration of initial operational capability of a major defense acquisition program,
(ii)failure of the program to maintain its availability or reliability thresholds, or
(iii)breach of the program's operations and support affordability cap, there shall be a sustainment review with the results documented in a memorandum by the relevant decision authority. At a minimum, the review required under subsection
(a)shall include the following elements: An independent cost estimate for the remainder of the life cycle of the program. A comparison of actual costs to the budget, and if budgetary shortfalls exists, an explanation of availability implications. A comparison between the assumed and achieved system reliabilities. An analysis of the most cost-effective source of repairs and maintenance. Data on the cost of consumables and depot-level repairables. Data on costs of information technology, networks, computer hardware, and software maintenance and upgrades. As applicable, an assessment of the actual fuel efficiencies compared to the projected fuel efficiencies as demonstrated in tests or operations. An analysis of the effort required for contracted sustaining engineering by contractors and the government. As applicable, a comparison of actual manpower requirements to previous estimates. An analysis of whether accurate and complete data is being reported in the relevant military department's cost systems, and if deficiencies exist, a plan to update the data and insure accurate and complete data is submitted in the future. . The table of sections at the beginning of such chapter is amended by adding at the end the following new item: 2441. Sustainment reviews. . The Secretary of Defense shall establish a commercial operational and support savings initiative to improve readiness and reduce operations and support costs by inserting existing commercial items or technology into military legacy systems through the rapid development of prototypes and fielding of production items based on current commercial technology. The commercial operational and support savings initiative shall fund programs that— reduce the costs of owning and operating a military system, including the costs of personnel, consumables, goods and services, and sustaining the support and investment associated with the peacetime operation of a weapon system; take advantage of the commercial sector’s technological innovations by inserting commercial technology into fielded weapon systems; and emphasize prototyping and experimentation with new technologies and concepts of operations. Projects funded under the commercial operational and support savings initiative shall consist of two phases, Phase 1 and Phase 2. Funds made available during Phase I shall be used to perform the non-recurring engineering, testing, and qualification that are typically needed to adapt a commercial item or technology for use in a military system. Phase I shall include— establishment of cost and performance metrics to evaluate project success; establishment of a transition plan and agreement with a military service or Defense Agency for adoption and sustainment of the technology or system; and the development, fabrication, and delivery of a prototype to a military service for installation into a fielded Department of Defense system. Programs shall be terminated if no agreement is established within two years of project initiation. The Office of the Secretary of Defense may provide up to 50 percent of Phase I funding for a project. The relevant military service or Defense Agency shall provide the remainder of Phase I funding, which may be provided out of operation and maintenance funding. Phase I funding shall not exceed three years. Phase II shall include the purchase of limited production quantities of the prototype kits and transition to a program of record for continued sustainment. Phase II awards may be made without competition as firm, fixed-price awards or as awards for the purchase of commercial items under part 12 of the Federal Acquisition Regulation. The competitive procedures requirements of chapter 173 of title 10, United States Code, and the cost and pricing data requirements of section 2306a of such title shall not apply to contracts awarded during Phase II of the commercial operational and support savings initiative. The use of general solicitation competitive procedures under the commercial operational and support savings initiative shall be considered to be the use of competitive procedures for purposes of chapter 137 of title 10, United States Code.
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