SARs

1
SARs Nunn-McCurdy An Update

• 2009 Business Manager's Conference
• May 19, 2009
• Larry Axtell, OUSD(ATL)

2
Agenda

• SARs
• FY 2009 submissions
• New Reporting Requirements (e.g., subprograms,
  DAMIR cost and funding detail)
• Nunn-McCurdy
• Current Breach Status
• Weapon System Acquisition Reform Act of 2009
  (Levin-McCain)

3
SARs December 2008 Submission

• Annual SARs due 60 days after Presidents budget
  (pursuant to 10 USC 2432)
• Presidents budget due NLT first Monday in
  February (pursuant to 31 USC 1105)
• Due to change in Administration, budget not
  submitted on February 2 (Obama revising Bush
  budget)
• President submitted topline budget on February
  26 (which General Counsel determined did not meet
  31 USC 1105)
• President submitted detailed budget on May 7
• Major program decisions (e.g., CSAR-X, DDG 1000,
  FCS, TSAT, VH-71, etc.)
• However, details of FY 2010 only (plus prior
  years FY 2008-9)

4
SARs December 2008 Submission

• Without revised funding guidance for the total
  program, DoD will not submit December 2008 SARs,
  except for programs with Nunn-McCurdy breaches
• H-1 Upgrades (significant breach from December
  2008)
• Termination report for VH-71 (critical breach
  from January 2009 will not be certified)
• December 2008 SARs for H-1 Upgrades and VH-71 due
  to Congress NLT July 6, 2009
• No press release planned

5
SARs June/September 2009 Submissions

• Quarterly Exception SARs required for programs
  with Nunn-McCurdy breaches or schedule delays of
  at least six months
• Due to Congress 45 days after the end of the
  fiscal year quarter
• As of June 30 reports due August 14
• As of September reports due November 14
• DoD plans to submit quarterly SARs for all
  programs with Nunn-McCurdy breaches
• DoD may defer quarterly SARs for schedule slips
• Issue with what to report for total program costs
  

6
SARs New Reporting Requirements

• Subprograms
• DAMIR cost and funding detail

7
SARs New Reporting Requirements Subprograms

• In response to DoD, FY 2009 National Defense
  Authorization Act permits DoD to designate
  subprograms for MDAPs
• That is, USD(ATL) can designate subprograms when
  an MDAP requires delivery of two or more end
  items that differ significantly in form and
  function
• In DoD acquisition environment, two primary
  instances when establishing subprograms may be
  advisable
• Evolutionary acquisition when blocks or
  increments are acquired in a sequential manner
  (e.g., JSOW)
• Major components are dissimilar and cannot be
  combined in a rational way to track unit costs
  (e.g., NAVSTAR GPS)

8
SARs New Reporting Requirements Subprograms

• FY 2009 NDAA requires Congress be notified 30
  days prior to taking effect (i.e., approval of
  APB)
• DoD Components must notify OSD 60 days prior to
  submitting proposed APB to MDA
• For ACAT ID MDAPs, USD(ATL) designates
  subprograms based on recommendations from OIPT
• For ACAT IC MDAPs, DoD Component MDA designates
  subprograms based on recommendations from MDA
  staff
• Note Recommendations from the OIPT or MDA
  staff should include guidance on whether
  statutory and regulatory requirements of DoDI
  5000.02 should apply at the subprogram or program
  level, i.e., Acquisition Strategy, Beyond-LRIP
  Report, CARD, etc.

9
SARs New Reporting Requirements Subprograms

• When one subprogram is designated within an MDAP,
  all remaining elements (increments or components)
  of the program shall also be appropriately
  organized into one or more other subprograms
  (pursuant to 10 USC 2430a)
• The DoDI 5000.02 requirement for each
  evolutionary increment to have its own APB is
  satisfied through the establishment of
  subprograms
• If a subprogram experiences a critical Nunn
  McCurdy unit cost breach, the certification
  required for the program to continue will need to
  be made at the program level.

10
SARs New Reporting Requirements DAMIR Cost and
Funding

• All costs/funding are to be broken out into
  year-by-year format
• In addition, procurement is to be broken into
• End item related recurring flyaway
• Non item related recurring flyaway
• Nonrecurring flyaway, and
• Support (initial spares and other)

11
SARs New Reporting Requirement DAMIR Cost and
Funding

• Also in base-year dollars

12
SARs New Reporting Requirement DAMIR Cost and
Funding

• Finally, recurring flyaway dollars are to be
  aligned with quantity to reflect the
  cost-quantity relationship of the current
  estimate

13
Nunn-McCurdy

• Current Breach Status
• Weapon System Acquisition Reform Act of 2009
  (Levin-McCain)

14
Nunn-McCurdy Current Baseline Breaches
15
Nunn-McCurdy Original Baseline Breaches
16
Nunn-McCurdy Levin-McCain

• In February 2009, Senators Carl Levin and John
  McCain introduced the Weapon Systems Acquisition
  Reform Act of 2009 (S.454) to Senate Armed
  Services Committee (SASC)
• After reclama by DoD, revised S.454 passed the
  Senate in May 2009
• Similar bill (less prescriptive H.R.2101)
  introduced by Representatives Ike Skelton and
  John McHugh (HASC)
• DoD publicly supports passage, expected by
  Memorial Day

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Nunn-McCurdy Levin-McCain

• Weapon Systems Acquisition Reform Act of 2009
  (S.454)
• Independent Performance Of Acquisition Oversight
  Functions (Section 101)
• Oversight Of Cost Estimation (Section 102)
• Oversight Of Systems Engineering (Section 103)
• Oversight Of Performance Assessment (Section 104)
• Assessment Of Technological Maturity Of Critical
  Technologies Of Major Defense Acquisition
  Programs By The Director Of Defense Research And
  Engineering (Section 105)
• Role Of The Commanders Of The Combatant Commands
  In Identifying Joint Military Requirements
  (Section 106)
• Acquisition Strategies Ensuring Competition
  Throughout The Lifecycle Of Major Defense
  Acquisition Programs (Section 201)
• Additional Requirements For Certain Major Defense
  Acquisition Programs (Section 202)
• Requirement For Certification Of Major Systems
  Prior To Milestone B (Section 203)
• Critical Cost Growth In Major Defense Acquisition
  Programs (Section 204)
• Organizational Conflicts Of Interest In The
  Acquisition Of Major Weapon Systems (Section 205)
• Awards For Department Of Defense Personnel For
  Excellence In The Acquisition Of Products And
  Services (Section 206)
• Consideration Of Trade-offs Among Cost, Schedule,
  And Performance In The Acquisition Of Major
  Weapon Systems (Section 207)

18
Nunn-McCurdy Levin-McCain

• For programs with critical Nunn-McCurdy breaches
  (25 to the current or 50 to the original
  baseline), SecDef (after consultation with JROC)
  shall determine root causes, including
• changes or growth in requirements
• unrealistic baseline estimates
• any design, engineering, manufacturing, or
  technology integration issues
• changes in procurement quantities
• inadequate program funding or funding
  instability
• poor performance by government or contractor
  personnel responsible for program management or
• other causes as identified by the SecDef

19
Nunn-McCurdy Levin-McCain

• SecDef shall then determine whether to terminate
  or restructure the program after assessing
• the root causes of cost growth
• the validity and urgency of the joint military
  requirement
• the viability of the acquisition strategy
• the quality of program management
• a broad range of potential material and
  non-material alternatives and
• the need to reduce funding for other programs due
  to cost growth on this program
• Before the end of the 60-day period
  beginning on the day the Selected Acquisition
  Report containing the information described in
  subsection (g) is required to be submitted under
  section 2432(f) of this title

20
Nunn-McCurdy Levin-McCain

• A program may be restructured only if
• a written certification (with a supporting
  explanation) is submitted along with the
  determination stating that
• 1. such program is essential to the
  national security
• 2. there are no alternatives to such
  program which will provide
  acceptable military capability at less cost
• 3. new estimates of the unit costs are
  reasonable
• 4. the program is a higher priority than
  programs whose funding
  must be reduced to accommodate cost growth on
  such program and
• 5. the management structure is adequate
  to control unit costs and
• the most recent milestone decision is revisited
  and results in approval of the restructured
  program

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• Thank You for Your Attention
• Any Questions?