DEFENSE ACQUISITION CHALLENGE PROGRAM EXTENSION, ENHANCEMENT, AND MODIFICATION TO ADDRESS CRITICAL COST GROWTH THRESHOLD BREACHES IN MAJOR DEFENSE ACQUISITION PROGRAMS.

SEC. 213. DEFENSE ACQUISITION CHALLENGE PROGRAM EXTENSION, ENHANCEMENT, AND MODIFICATION TO ADDRESS CRITICAL COST GROWTH THRESHOLD BREACHES IN MAJOR DEFENSE ACQUISITION PROGRAMS.(a) Assessment of Additional Issues Required in the Event of Critical Cost Growth.—Section 2433(e)(2)(A) of title 10, United States Code, is amended—(1) by redesignating clauses (i), (ii), and (iii) as clauses (ii), (iii), and (iv) respectively; and(2) by inserting before clause (ii) (as so redesignated) the following new clause:“(i) any design, engineering, manufacturing, or technology integration issues that contributed significantly to the cost growth of the program;”.(b) Requirement for Challenge Program to Address Critical Cost Growth Threshold Breaches in Major Defense Acquisition Programs.—(1) Solicitation of challenge proposals.—Section 2359b(c) of title 10, United States Code, is amended—(A) by redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), respectively; and(B) by inserting after paragraph (3) the following new paragraph (4):“(4)(A) The Under Secretary shall establish procedures for the prompt issuance of a solicitation for challenge proposals addressing—“(i) any acquisition program for which, since the last such announcement, the Secretary concerned has determined under section 2433(d) of this title that the program’s acquisition unit cost or procurement unit cost has increased by a percentage equal to or greater than the critical cost growth threshold for the program (in this section referred to as a ‘critical cost growth threshold breach’); and“(ii) any design, engineering, manufacturing, or technology integration issues, in accordance with the assessment required by section 2433(e)(2)(A) of this title, that have contributed significantly to the cost growth of such program.“(B) A solicitation under this paragraph may be included in a broad agency announcement issued pursuant to paragraph (3) as long as the broad agency announcement is released in an expeditious manner following the determination of the Secretary concerned that a critical cost growth threshold breach has occurred with respect to a major defense acquisition program.”.(2) Requirement for guidelines for covering costs of challenge proposals.—Section 2359b(e) of such title is amended by adding at the end the following new paragraph:“(3) In the case of a challenge proposal submitted in response to a solicitation issued as a result of a critical cost growth threshold breach that is determined under full review and evaluation to satisfy each of the criteria specified in subsection (c)(5), the Under Secretary shall establish guidelines for covering the costs of the challenge proposal. If appropriate, such guidelines shall not be restricted to funding provided by the Defense Acquisition Challenge Program, but shall also consider alternative funding sources, such 120 STAT. 2122 as the acquisition program with respect to which the breach occurred.”.(3) Action upon unfavorable full review and evaluation.—Section 2359b of such title is amended—(A) by redesignating subsections (f), (g), (h), (i), and (j) as subsections (g), (h), (i), (j), and (k) respectively; and(B) by inserting after subsection (e) the following new subsection (f):“(f) Action Upon Unfavorable Full Review and Evalua- tion.—Under procedures prescribed by the Under Secretary, if a challenge proposal is determined by a Panel to satisfy each of the criteria specified in subsection (c)(5), but is not determined under a full review and evaluation to satisfy such criteria, the following provisions apply:“(1) The office carrying out the full review and evaluation shall provide to the Panel that conducted the preliminary evaluation a statement containing a summary of the rationale for the unfavorable evaluation.“(2) If the Panel disagrees with the rationale provided under paragraph (1), the Panel may return the challenge proposal to the office for further consideration.”.(4) Additional information required to be included in annual report.—Section 2359b(j) of such title, as redesignated by paragraph (3), is amended by striking “No report is required for a fiscal year in which the Challenge Program is not carried out.” and inserting “The report shall also include a list of each challenge proposal that was determined by a Panel to satisfy each of the criteria specified in subsection (c)(5), but was not determined under a full review and evaluation to satisfy such criteria, together with a detailed rationale for the Department’s determination that such criteria were not satisfied.”.(c) Evaluation and Report Required.—The Under Secretary of Defense for Acquisition, Technology, and Logistics, in coordination with the service acquisition executives, shall—(1) evaluate the efficacy of the incentives provided to encourage the adoption of each challenge proposal receiving favorable full review and evaluation, as required by section 2359b(e)(2) of title 10, United States Code;(2) identify additional incentives and authorities required, if any, to further facilitate the adoption of each challenge proposal receiving favorable full review and evaluation, particularly in the case of challenge proposals submitted in response to critical cost growth threshold breaches (as such term is used in section 2359b of such title); and(3) not later than March 1, 2007, submit to the Committees on Armed Services of the Senate and the House of Representatives a report setting forth the results of such evaluation and identification.(d) Priority for Proposals From Certain Businesses.—Paragraph (6) of section 2359b(c) of such title, as redesignated by paragraph (b)(1)(A), is amended to read as follows:“(6) The Under Secretary—“(A) may establish procedures to ensure that the Challenge Program does not become an avenue for the repetitive submission of proposals that have been previously reviewed and found not to have merit; and120 STAT. 2123“(B) may establish procedures to ensure that the Challenge Program establishes appropriate priorities for proposals from businesses that are not major contractors with the Department of Defense.”.(e) Confidentiality.—Subsection (h) of section 2359b of such title, as redesignated by subsection (b)(3), is amended—(1) by amending the heading to read as follows: “Conflicts of Interest and Confidentiality”; and(2) by striking the period at the end and inserting the following: “and that the identity of any person or activity submitting a challenge proposal is not disclosed outside the Federal Government, prior to contract award, without the consent of the person or activity. For purposes of the proceeding sentence, the term ‘Federal Government’ includes both employees of the Federal Government and employees of Federal Government contractors providing advisory and assistance services as described in part 37 of the Federal Acquisition Regulation.”.(f) Extension.—Subsection (k) of section 2359b of title 10, United States Code, as redesignated by subsection (b)(3), is amended by striking “September 30, 2007” and inserting “September 30, 2012”.(g) Additional Conforming Amendments.—Section 2359b of such title is further amended—(1) in subsection (c)(7), as redesignated by subsection (b), by striking “paragraph (4)” and inserting “paragraph (5)”;(2) in subsection (d)(1), by striking “subsection (c)(6)” and inserting “subsection (c)(7)”;(3) in subsection (d)(2), by striking “subsection (c)(4)” and inserting “subsection (c)(5)”; and(4) in subsection (e)(1), by striking “subsection (c)(4)” and inserting “subsection (c)(5)”.