Sec. 401. Program for enhancing secondary sources and supply chain management for the Department of Defense
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The Secretary of Defense shall establish policy, regulations, and guidance to enhance the creation and utilization of secondary sources for Department of Defense systems. The program shall— define qualification, testing, evaluation, and airworthiness determinations for secondary sources; create prepackaged templates, including Source Approval Request
(SAR)and Parts Manufacturer Approval (PMA), for various categories of parts and systems; and address part availability problems, obsolescence management, and supply chain cost inflation. The objectives of the program established under subsection
(a)are— to develop a streamlined process for secondary source qualification that can be rapidly deployed in both wartime and peacetime conditions; to ensure that the qualification process during wartime can be completed within weeks, rather than months or years, to maintain operational readiness and support rapid deployment; and to maintain a robust and flexible supply chain that adopt advanced manufacturing techniques and can quickly adapt to changing conditions and requirements. The Secretary of Defense shall develop a process and detailed templates for qualification, testing, certification, and airworthiness determinations as follows: Not later than 180 days after the date of the enactment of this Act, the establishment of policies implementing the process to encourage and support the delegation of material review board authorities, processes, and approvals to the contractor or subcontractor (at any tier) with respect to non-safety critical items for industrial capabilities described in subsection (b). The implementation, where feasible and advisable, of commercial processes and procedures, including forms and templates such as Sources Approval Requests and Alternative Offers, for the evaluation and qualification of vendors, including manufacturers and distributors, that are part of the program established under subsection (a). The implementation of processes and, if necessary, the development of military specifications or other similar requirements documents to pre-qualify vendors to supply safety critical items or mission critical items for industrial capabilities based on— an assessment of the vendor’s material and process controls to assure conformance to specification and contractual requirements; and audit and inspection requirements of the Department of Defense. The review of test reports and, not later than 45 days after a test is completed, notification of approval decisions to requesting member of the acquisition workforce (as defined in section 101 of title 10, United States Code). The establishment of processes for qualification of safety critical or flight critical end items produced through advanced processes and technologies, such as additive manufacturing. The consideration for evaluation and qualification of alternative material types that could be viable replacements or interchangeable sources of material using streamlined requirements; Where appropriate, the development of processes for qualification of a system or subsystem by a designated approval authority within a military department in order to avoid the need for qualification of individual parts while ensuring the performance of parts and the interactions of the parts in the system or subsystem. The development of pathways to streamline and consolidate the approval authority of the process established pursuant to subsection (a). Minimization of the need for military-unique specifications and test procedures, and when required, the use of procedures that— detail the performance or functions required by the item requiring qualification and do not constrain implementation of such process; and is completed upon request by a member of the acquisition workforce— not later than 30 days after the date of such request, for unmanned items, non-safety critical items, or non-mission critical items; and not later than 180 days after the date of such request, for safety critical items or mission critical items. The program established under subsection
(a)shall incorporate ASME Y.14.24 Original Design Activity
(ODA)and Current Design Activity
(CDA)transition planning and templates, including— standardized templates for transitioning from ODA to CDA; and comprehensive guidelines for planning and executing transitions between ODA and CDA. The pilot program shall include strategies— to implement improved inventory tracking systems; to identify and pre-qualify alternative sources for critical parts, including Federal Aviation Administration-certified parts; and to develop proactive obsolescence management strategies. The program established under subsection
(a)shall include measures— to conduct regular benchmarking of Department of Defense part costs against commercial sector costs; and to perform cost-benefit analyses to identify inefficiencies and areas for cost reduction. The program established under subsection
(a)shall establish more effective exception or waiver procedures for business rules. These procedures shall— allow for alternative design reviews; and designate activities and roles in decision-making processes to ensure accountability and best value outcomes. The program established under subsection
(a)shall establish a licensing royalty plan similar to the intellectual property
(IP)rights royalty payments made during World War II by the predecessors to the Department of Defense, including— fair and reasonable royalty payments to ODAs and CDAs for the use of intellectual property necessary for secondary source development; and mechanisms to ensure timely and equitable distribution of royalty payments. The Secretary of Defense shall establish an engineering workforce development program to provide hands-on exposure for government engineers, manufacturing or repair staff, and software developers. The program shall— equip participants with the skills necessary to effectively plan and execute secondary sourcing initiatives; include training on qualification, testing, evaluation, and airworthiness determinations; and provide opportunities for practical experience in working with secondary sources and supply chain management. Activities under the program established under subsection
(a)shall not require a determination of cost savings be met before creating an alternative source and obtaining technical data or software needed for replenishment parts or software, including by reverse engineering. The purpose of the exemption is to enable wartime logistics, point-of-use manufacturing at operating locations, alternative sourcing for suppliers or original equipment manufacturers
(OEMs)unable to meet demand within accelerated wartime or contingency logistics demand schedules, or when mission readiness rates are adversely impacted, or when value engineering determines that alternative sourcing is a better option than OEM or current supplier value. The program established under subsection
(a)shall include Level of Repair Analysis
(LORA)that considers non-economic factors such as battle damage repair, logistics under attack, and supply chain disruption factors in determining repair or replacement decisions. Items approved under the process developed pursuant to subsection
(a)that do not present a safety risk to human life— shall be exempt from Class A and Class B mishap investigations, as defined by the Secretary of Defense; and shall be subject to streamlined investigation procedures, as determined by the Secretary of Defense, with respect to a mishap. Approval authorities responsible for the process developed pursuant to subsection
(a)shall not be held liable by the Department of Defense for mishaps with respect to items approved pursuant to the process, absent evidence of willful misconduct, gross negligence, or intentional fraud.