USE OF THE DEFENSE MODERNIZATION ACCOUNT FOR LIFE CYCLE COST REDUCTION INITIATIVES.

SEC. 1008. USE OF THE DEFENSE MODERNIZATION ACCOUNT FOR LIFE CYCLE COST REDUCTION INITIATIVES. (a) Funds Available for Defense Modernization Account.—Section 2216 of title 10, United States Code, is amended—(1) by striking subsection (c);(2) by redesignating subsection (b) as subsection (c); and(3) by inserting after subsection (a) the following new subsection (b):“(b) Funds Available for Account.—The Defense Modernization Account shall consist of the following:“(1) Amounts appropriated to the Defense Modernization Account for the costs of commencing projects described in subsection (d)(1), and amounts reimbursed to the Defense Modernization Account under subsections (c)(1)(B)(iii) out of savings derived from such projects.“(2) Amounts transferred to the Defense Modernization Account under subsection (c).”.(b) Start-Up Funding.—Subsection (d) of such section is amended—(1) by striking “available from the Defense Modernization Account pursuant to subsection (f) or (g)” and inserting “in the Defense Modernization Account”; (2) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3), respectively; and(3) by inserting after “purposes:” the following new paragraph (1):“(1) For paying the costs of commencing any project that, in accordance with criteria prescribed by the Secretary of Defense, is undertaken by the Secretary of a military department or the head of a Defense Agency or other element of the Department of Defense to reduce the life cycle cost of a new or existing system.”.(c) Reimbursement of Account Out of Savings.—(1) Paragraph (1)(B) of subsection (c) of such section, as redesignated by subsection (a)(2), is amended by adding at the end the following new clause:“(iii) Unexpired funds in appropriations accounts that are available for procurement or operation and maintenance of a system, if and to the extent that savings are achieved for such accounts through reductions in life cycle costs of such system that result from one or more projects undertaken with respect to such systems with funds made available from the Defense Modernization Account under subsection (b)(1).”.(2) Paragraph (2) of such subsection is amended by inserting “, other than funds referred to in subparagraph (B)(iii) of such paragraph,” after “Funds referred to in paragraph (1)”.(d) Regulations.—Subsection (h) of such section is amended—(1) by inserting “(1)” after “Comptroller.—”; and(2) by adding at the end the following new paragraph (2):“(2) The regulations prescribed under paragraph (1) shall, at a minimum, provide for—“(A) the submission of proposals by the Secretaries concerned or heads of Defense Agencies or other elements of the Department of Defense to the Comptroller for the use of Defense 117 STAT. 1587 Modernization Account funds for purposes set forth in subsection (d); “(B) the use of a competitive process for the evaluation of such proposals and the selection of programs, projects, and activities to be funded out of the Defense Modernization Account from among those proposed for such funding; and “(C) the calculation of—“(i) the savings to be derived from projects described in subsection (d)(1) that are to be funded out of the Defense Modernization Account; and“(ii) the amounts to be reimbursed to the Defense Modernization Account out of such savings pursuant to subsection (c)(1)(B)(iii).”.(e) Annual Report.—Subsection (i) of such section is amended—(1) by striking “Quarterly Reports.—(1) Not later than 15 days after the end of each calendar quarter,” and inserting “Annual Report.—(1) Not later than 15 days after the end of each fiscal year,”; and(2) in paragraph (1), by striking “quarter” in subparagraphs (A), (B), and (C), and inserting “fiscal year”.(f) Codification and Extension of Expiration of Authority.—(1) Such section is further amended by adding at the end the following new subsection:“(k) Expiration of Authority and Account.—(1) The authority under subsection (c) to transfer funds into the Defense Modernization Account terminates at the close of September 30, 2006.“(2) Three years after the termination date specified in paragraph (1), the Defense Modernization Account shall be closed and any remaining balance in the account shall be canceled and thereafter shall not be available for any purpose.”.(2) Subsection (c) of section 912 of the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104–106; 110 Stat. 410; 10 U.S.C. 2216 note) is repealed.