COST ASSESSMENT AND PROGRAM EVALUATION.

SEC. 101. COST ASSESSMENT AND PROGRAM EVALUATION.(a) Director of Cost Assessment and Program Evaluation.—(1) In general.—Chapter 4 of title 10, United States Code, is amended by inserting after section 139b the following new section:“§ 139c. Director of Cost Assessment and Program Evaluation“(a) Appointment.—There is a Director of Cost Assessment and Program Evaluation in the Department of Defense, appointed by the President, by and with the advice and consent of the Senate.“(b) Independent Advice to Secretary of Defense.—(1) The Director of Cost Assessment and Program Evaluation is the principal advisor to the Secretary of Defense and other senior officials of the Department of Defense, and shall provide independent analysis and advice to such officials, on the following matters:“(A) Matters assigned to the Director pursuant to this section and section 2334 of this title.“(B) Matters assigned to the Director by the Secretary pursuant to section 113 of this title.“(2) The Director may communicate views on matters within the responsibility of the Director directly to the Secretary of Defense and the Deputy Secretary of Defense without obtaining the approval or concurrence of any other official within the Department of Defense.“(c) Deputy Directors.—There are two Deputy Directors within the Office of the Director of Cost Assessment and Program Evaluation, as follows:“(1) The Deputy Director for Cost Assessment.“(2) The Deputy Director for Program Evaluation.“(d) Responsibilities.—The Director of Cost Assessment and Program Evaluation shall serve as the principal official within the senior management of the Department of Defense for the following:“(1) Cost estimation and cost analysis for acquisition programs of the Department of Defense, and carrying out the duties assigned pursuant to section 2334 of this title.“(2) Analysis and advice on matters relating to the planning and programming phases of the Planning, Programming, Budgeting and Execution system, and the preparation of materials and guidance for such system, as directed by the Secretary of Defense, working in coordination with the Under Secretary of Defense (Comptroller).“(3) Analysis and advice for resource discussions relating to requirements under consideration in the Joint Requirements Oversight Council pursuant to section 181 of this title.123 STAT. 1706“(4) Formulation of study guidance for analyses of alternatives for major defense acquisition programs and performance of such analyses, as directed by the Secretary of Defense“(5) Review, analysis, and evaluation of programs for executing approved strategies and policies, ensuring that information on programs is presented accurately and completely, and assessing the effect of spending by the Department of Defense on the United States economy.“(6) Assessments of special access and compartmented intelligence programs, in coordination with the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Under Secretary of Defense for Intelligence and in accordance with applicable policies.“(7) Assessments of alternative plans, programs, and policies with respect to the acquisition programs of the Department of Defense.“(8) Leading the development of improved analytical skills and competencies within the cost assessment and program evaluation workforce of the Department of Defense and improved tools, data, and methods to promote performance, economy, and efficiency in analyzing national security planning and the allocation of defense resources.” .(2) Clerical amendment.—The table of sections at the beginning of chapter 4 of such title is amended by inserting after the item relating to section 139b the following new item: “139c. Director of Cost Assessment and Program Evaluation.”. (3) Executive schedule level iv.—Section 5315 of title 5, United States Code, is amended by inserting after the item relating to the Director of Operational Test and Evaluation, Department of Defense the following new item: “Director of Cost Assessment and Program Evaluation, Department of Defense.”.(b) Independent Cost Estimation and Cost Analysis.—(1) In general.—Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section:“§ 2334. Independent cost estimation and cost analysis“(a) In General.—The Director of Cost Assessment and Program Evaluation shall ensure that the cost estimation and cost analysis processes of the Department of Defense provide accurate information and realistic estimates of cost for the acquisition programs of the Department of Defense. In carrying out that responsibility, the Director shall—“(1) prescribe, by authority of the Secretary of Defense, policies and procedures for the conduct of cost estimation and cost analysis for the acquisition programs of the Department of Defense;“(2) provide guidance to and consult with the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense (Comptroller), the Secretaries of the military departments, and the heads of the Defense Agencies with respect to cost estimation in the Department of Defense in general and with respect to specific cost estimates and cost analyses to be conducted in connection with a major defense acquisition program 123 STAT. 1707 under chapter 144 of this title or a major automated information system program under chapter 144A of this title;“(3) issue guidance relating to the proper selection of confidence levels in cost estimates generally, and specifically, for the proper selection of confidence levels in cost estimates for major defense acquisition programs and major automated information system programs;“(4) issue guidance relating to full consideration of life-cycle management and sustainability costs in major defense acquisition programs and major automated information system programs;“(5) review all cost estimates and cost analyses conducted in connection with major defense acquisition programs and major automated information system programs;“(6) conduct independent cost estimates and cost analyses for major defense acquisition programs and major automated information system programs for which the Under Secretary of Defense for Acquisition, Technology, and Logistics is the Milestone Decision Authority—“(A) in advance of—“(i) any certification under section 2366a or 2366b of this title;“(ii) any decision to enter into low-rate initial production or full-rate production;“(iii) any certification under section 2433a of this title; and“(iv) any report under section 2445c(f) of this title; and“(B) at any other time considered appropriate by the Director or upon the request of the Under Secretary of Defense for Acquisition, Technology, and Logistics; and“(7) periodically assess and update the cost indexes used by the Department to ensure that such indexes have a sound basis and meet the Department’s needs for realistic cost estimation.“(b) Review of Cost Estimates, Cost Analyses, and Records of the Military Departments and Defense Agencies.—The Secretary of Defense shall ensure that the Director of Cost Assessment and Program Evaluation—“(1) promptly receives the results of all cost estimates and cost analyses conducted by the military departments and Defense Agencies, and all studies conducted by the military departments and Defense Agencies in connection with such cost estimates and cost analyses, for major defense acquisition programs and major automated information system programs of the military departments and Defense Agencies; and“(2) has timely access to any records and data in the Department of Defense (including the records and data of each military department and Defense Agency and including classified and proprietary information) that the Director considers necessary to review in order to carry out any duties under this section.“(c) Participation, Concurrence, and Approval in Cost Estimation.—The Director of Cost Assessment and Program Evaluation may—“(1) participate in the discussion of any discrepancies between an independent cost estimate and the cost estimate 123 STAT. 1708 of a military department or Defense Agency for a major defense acquisition program or major automated information system program of the Department of Defense;“(2) comment on deficiencies in the methodology or execution of any cost estimate or cost analysis developed by a military department or Defense Agency for a major defense acquisition program or major automated information system program;“(3) concur in the choice of a cost estimate within the baseline description or any other cost estimate (including the confidence level for any such cost estimate) for use at any event specified in subsection (a)(6); and“(4) participate in the consideration of any decision to request authorization of a multiyear procurement contract for a major defense acquisition program.“(d) Disclosure of Confidence Levels for Baseline Estimates of Major Defense Acquisition Programs.—The Director of Cost Assessment and Program Evaluation, and the Secretary of the military department concerned or the head of the Defense Agency concerned (as applicable), shall each—“(1) disclose in accordance with paragraph (2) the confidence level used in establishing a cost estimate for a major defense acquisition program or major automated information system program, the rationale for selecting such confidence level, and, if such confidence level is less than 80 percent, the justification for selecting a confidence level of less than 80 percent; and“(2) include the disclosure required by paragraph (1)—“(A) in any decision documentation approving a cost estimate within the baseline description or any other cost estimate for use at any event specified in subsection (a)(6); and“(B) in the next Selected Acquisition Report pursuant to section 2432 of this title in the case of a major defense acquisition program, or the next quarterly report pursuant to section 2445c of this title in the case of a major automated information system program.“(e) Annual Report on Cost Assessment Activities.—(1) The Director of Cost Assessment and Program Evaluation shall prepare an annual report summarizing the cost estimation and cost analysis activities of the Department of Defense during the previous year and assessing the progress of the Department in improving the accuracy of its cost estimates and analyses. Each report shall include, for the year covered by such report, an assessment of—“(A) the extent to which each of the military departments and Defense Agencies have complied with policies, procedures, and guidance issued by the Director with regard to the preparation of cost estimates for major defense acquisition programs and major automated information systems;“(B) the overall quality of cost estimates prepared by each of the military departments and Defense Agencies for major defense acquisition programs and major automated information system programs; and“(C) any consistent differences in methodology or approach among the cost estimates prepared by the military departments, the Defense Agencies, and the Director.123 STAT. 1709“(2) Each report under this subsection shall be submitted concurrently to the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense (Comptroller), and the congressional defense committees not later than 10 days after the transmittal to Congress of the budget of the President for the next fiscal year (as submitted pursuant to section 1105 of title 31).“(3)(A) Each report submitted to the congressional defense committees under this subsection shall be submitted in unclassified form, but may include a classified annex.“(B) The Director shall ensure that a report submitted under this subsection does not include any information, such as proprietary or source selection sensitive information, that could undermine the integrity of the acquisition process.“(C) The unclassified version of each report submitted to the congressional defense committees under this subsection shall be posted on an Internet website of the Department of Defense that is available to the public.“(4) The Secretary of Defense may comment on any report of the Director to the congressional defense committees under this subsection.“(f) Staff.—The Secretary of Defense shall ensure that the Director of Cost Assessment and Program Evaluation has sufficient professional staff of military and civilian personnel to enable the Director to carry out the duties and responsibilities of the Director under this section.” .(2) Clerical amendment.—The table of sections at the beginning of chapter 137 of such title is amended by adding at the end the following new item: “2334. Independent cost estimation and cost analysis.”. (c) Transfer of Personnel and Functions.—(1) Transfer of functions.—The functions of the Office of Program Analysis and Evaluation of the Department of Defense, including the functions of the Cost Analysis Improvement Group, are hereby transferred to the Office of the Director of Cost Assessment and Program Evaluation.(2) Transfer of personnel to deputy director for independent cost assessment.—The personnel of the Cost Analysis Improvement Group are hereby transferred to the Deputy Director for Cost Assessment in the Office of the Director of Cost Assessment and Program Evaluation.(3) Transfer of personnel to deputy director for program analysis and evaluation.—The personnel (other than the personnel transferred under paragraph (2)) of the Office of Program Analysis and Evaluation are hereby transferred to the Deputy Director for Program Evaluation in the Office of the Director of Cost Assessment and Program Evaluation.(d) Conforming Amendments.—(1) Section 181(d) of title 10, United States Code, is amended by striking “Director of the Office of Program Analysis and Evaluation” and inserting “Director of Cost Assessment and Program Evaluation”.(2) Section 2306b(i)(1)(B) of such title is amended by striking “Cost Analysis Improvement Group of the Department of Defense” and inserting “Director of Cost Assessment and Program Analysis”.123 STAT. 1710(3) Section 2366a(a)(4) of such title is amended by inserting “, with the concurrence of the Director of Cost Assessment and Program Evaluation,” after “has been submitted”.(4) Section 2366b(a)(1)(C) of such title is amended by inserting “, with the concurrence of the Director of Cost Assessment and Program Evaluation,” after “have been developed to execute”.(5) Subparagraph (A) of section 2434(b)(1) of such title is amended to read as follows:“(A) be prepared or approved by the Director of Cost Assessment and Program Evaluation; and”.(6) Section 2445c(f)(3) of such title is amended by striking “are reasonable” and inserting “have been determined, with the concurrence of the Director of Cost Assessment and Program Evaluation, to be reasonable”.(e) Report on Monitoring of Operating and Support Costs for Major Defense Acquisition Programs.—(1) Report to secretary of defense.—Not later than one year after the date of the enactment of this Act, the Director of Cost Assessment and Program Evaluation under section 139c of title 10 United States Code (as added by subsection (a)), shall review existing systems and methods of the Department of Defense for tracking and assessing operating and support costs on major defense acquisition programs and submit to the Secretary of Defense a report on the finding and recommendations of the Director as a result of the review, including an assessment by the Director of the feasibility and advisability of establishing baselines for operating and support costs under section 2435 of title 10, United States Code.(2) Transmittal to congress.—Not later than 30 days after receiving the report required by paragraph (1), the Secretary shall transmit the report to the congressional defense committees, together with any comments on the report the Secretary considers appropriate.