prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The Commercial Space Launch Act Amendments of 1988 established the foundation for the current U S  policy to potentially provide federal payment for a portion of claims by third parties for injury, damage, or loss that results from a commercial launch or reentry accident  A stated goal of the act was to provide a competitive environment for the U S  commercial space launch industry  The act also provided for, among other things, government protection against some losses—referred to as indemnification—while still minimizing the cost to taxpayers  All FAA- licensed commercial launches and reentries by U S  companies, whether unmanned or manned and from the United States or overseas, are covered by federal indemnification for third-party damages that result from the launch or reentry  According to agency officials, in 2016 FAA issued five active licenses, which had an average third-party MPL of about $51 million and ranged from $10 million to $99 million  The amount of insurance coverage that FAA requires launch companies to purchase—the MPL value—is intended to reflect the greatest dollar amount of loss to third parties and the federal government for bodily injury and property damage that can be reasonably expected to result from a launch or reentry accident  FAA calculates separate MPL values for potential damages to third parties and the federal government  For each launch license that it issues, FAA determines MPL values for third parties with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 10 million chance of occurring  For damages to the federal government, FAA determines MPL values with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 100,000 chance of occurring  According to FAA, the agency defines these probability thresholds to estimate the federal government’s exposure to losses above the MPL  Agency officials said that the current probability thresholds are set such that losses are very unlikely to exceed launch companies’ private insurance and become potential costs for the government under CSLCA  FAA’s process for determining the MPL value for a launch or reentry license generally includes three elements: 1  Number of casualties  Estimating the number of third-party casualties involves adding the number of direct and secondary casualties that could result from a launch accident  Direct casualty estimates include serious injuries and deaths  Secondary casualties include those resulting from fires and collapsing buildings  2  Cost of casualties  FAA uses $3 million as an estimate of the average loss per casualty, which is multiplied by the number of estimated casualties  3  Property damage  FAA applies a predetermined factor—which it recently changed from 50 percent to 25 percent—to the estimated cost of casualties to derive estimated losses from property damage  The total MPL is equal to the estimated cost of casualties plus property damage  FAA has revised two components of its MPL methodology since our 2012 report  For example, in April 2016, the agency adopted a new method for estimating the number of casualties, known as the risk profile method  This method uses different tools to simulate a range of possible scenarios to create a distribution of potential casualty numbers and the simulated probability of different levels of casualty numbers  The risk profile method replaced FAA’s “overlay method,” which was a method it had used since the early 1990s which the agency said did not work well for launches of small launch vehicles in remote areas, or for reentries  In addition, FAA reduced the factor it uses to estimate losses due to property damage, based on tests of a new process for estimating such losses that showed the previous factor was too high  We have previously reviewed FAA’s MPL methodology in 2012 and 2017  In 2012 we examined the U S  government’s indemnification policy, the federal government’s potential costs for indemnification, and the effects of ending indemnification on the competitiveness of U S  launch companies, among other aspects of FAA’s MPL methodology  In 2017 we examined the extent to which FAA had revised its MPL methodology since our 2012 report to address previously cited weaknesses and the potential effect of any changes to that methodology on financial liabilities for the federal government  The findings and recommendations of those reports, including any unaddressed weaknesses, are discussed later in this report  CSLCA required FAA to evaluate its MPL methodology incorporating three requirements, but the agency’s report did not fully address these requirements  First, the act required FAA to ensure a balance of risk between launch companies and the federal government  However, agency officials told us that they did not re-evaluate the probability thresholds—which are used to divide the risk of loss between launch companies and the federal government—as part of evaluating its MPL methodology when implementing the risk profile method due to resource constraints  Second, the act required FAA to consider the cost impact of implementing an updated MPL methodology, but the agency did not evaluate the impact of implementing its revised methodology on the direct costs to launch companies (insurance premiums) and to the federal government (indemnification liability)  Third, the act required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL, but they did not consult such parties in response to the act  Without fully addressing CSLCA’s mandated requirements, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary  In its report, FAA states that implementing an updated MPL methodology in April 2016—the risk profile method—helps ensure that the federal government is not exposed to greater liability costs than intended and that launch companies are not required to purchase more insurance coverage than necessary, as required under CSLCA  Further, agency officials told us that their updated methodology is technically more valid and improves their ability to avoid overestimating MPL values (which can cause launch companies to purchase more insurance coverage than necessary) or significantly underestimating MPL values (which can expose the federal government to greater costs than intended)  While an improved model may provide a more realistic calculation of the MPL, by changing the resulting estimates it can also change the balance between the federal government’s exposure to liability costs and the amount of insurance launch companies are required to purchase  For example, if the more realistic results produced by the revised methodology increased the MPL estimates, this would increase insurance costs for the launch companies and reduce the federal government’s exposure, thereby shifting the balance of costs between the two and suggesting a reevaluation of the thresholds  In addition, FAA officials told us that they had not reevaluated the probability thresholds upon implementing the revised MPL methodology, although defining these thresholds is their primary mechanism for adjusting the balance of risk between launch companies and the federal government  Agency officials acknowledged that an examination of the thresholds’ continued appropriateness would be warranted in the future  However, they told us that changing the probability thresholds would require significant effort because it would require them to change federal regulations and that resources are currently allocated to other rulemaking priorities  Nevertheless, without evaluating the appropriateness of the probability threshold as part of the mandated evaluation of the MPL methodology, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary  CSLCA also required FAA to consider the cost impact on both the commercial space launch industry and the federal government of implementing an updated MPL methodology  In its report to Congress, the agency discussed indirect costs to launch applicants and the federal government  For example, FAA discussed indirect data burden costs on launch company applicants and FAA analysts associated with the agency’s risk profile method implementation  The report states that the risk profile method requires more data from a launch applicant than the previous method, but that the added burden is minimal because the information is similar to the type of information required by FAA for a risk analysis  Agency officials also said that the risk profile method requires more of an FAA analyst’s time than the overlay method, but that the added burden is minimal because the work done by FAA on risk analysis provides much of the foundation for an MPL analysis  However, FAA’s report did not include an evaluation of the direct costs to launch companies and the federal government of implementing an updated MPL methodology  The report identifies the direct cost to the launch industry as insurance premiums, and the direct cost to the federal government include potential indemnification payments  Agency officials also told us that the agency does not track commercial space launch insurance costs, and that they do not have meaningful insights on insurance premiums paid by commercial launch companies  FAA officials told us that they only have a general notion of insurance premiums because the industry is reluctant to share such information  FAA officials also told us that, outside of the work done for the report, they have not evaluated the economic implications for launch companies of implementing an updated MPL methodology  Without evaluating direct costs to both the launch companies and the federal government, FAA will be limited in its ability to consider the impact of the cost to both the industry and the federal government of implementing an updated methodology  Although CSLCA required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology for the mandated report, it obtained limited input  For example, FAA officials told us that they obtained input from their Commercial Space Transportation Advisory Committee (COMSTAC) in April 2016 about what to include in their report to Congress, but did not consult with the commercial space sector and insurance providers to evaluate their MPL methodology in response to CSLCA  FAA officials also said that, to respond to CSLCA’s consultation requirement, they did not think they needed to repeat the consultations they took in 2013  In January 2013, the agency solicited input from COMSTAC’s Business/Legal Working Group about how to best conduct a review of FAA’s methodology for calculating MPL, in response to our July 2012 report  FAA also briefed the Business/Legal Working Group in May 2013 to solicit input on MPL methodologies, including the risk profile method  In the January 2013 meeting, a COMSTAC member suggested several contractors for a study by outside experts of the complete MPL methodology, and FAA subsequently hired one of these contractors to develop the risk profile method that it implemented in April 2016  However, the agency did not solicit input from COMSTAC about its risk profile methodology prior to its April 2016 implementation or following CSLCA’s November 2015 mandated evaluation  As a result, FAA lacks input on the effect of its revised MPL methodology on launch companies and the federal government, making it difficult to evaluate the balance of risk between the two  Our 2012 report identified concerns with all three components of FAA’s MPL methodology: estimating the number of casualties, estimating the cost of casualties, and deriving estimated property damage costs from estimated casualty costs  In that report we recommended that the agency reassess its methodology, including the reasonableness of several key elements  As noted in our 2017 report, FAA has since made improvements to its methodology  However, it still has not yet updated the cost of a casualty
Report 2: com/daily-news/2013/06/04/sexual-assaults-force-changes-to-military-justice html Zengerle, Patricia  "U S  Lawmakers Act to Limit Military Authority in Sex Assault Cases," Reuters, June 5, 2013, at http://www reuters com/article/2013/06/05/us-usa-military-sexassault-congress-idUSBRE9541IG20130605 Cassata, Donna and Richard Lardner  " House OKs 2-Yr Jail Term for Military Sex Assault ," Associated Press, June 14, 2013, at http://www military com/daily-news/2013/06/14/house-oks-2-year-jail-term-for-military-sex-assault html Montgomery, Nancy  " After 2 decades of sexual assault in military, no real change in message ," Stars and Stripes , July 7, 2013, at https://www stripes com/news/after-2-decades-of-sexual-assault-in-military-no-real-change-in-message-1 229091 Steinhauer, Jennifer  "Complex Fight in Senate over Curbing Military Sex Assaults," New York Times , June 14, 2013, at http://www nytimes com/2013/06/15/us/politics/in-senate-complex-fight-over-curbing-sexual-military-assaults html?pagewanted=all Dao, James  "In Debate over Military Sexual Assault, Men Are Overlooked Victims," New York Times , June 23, 2013, at http://www nytimes com/2013/06/24/us/in-debate-over-military-sexual-assault-men-are-overlooked-victims html?pagewanted=all&_r=0 Sisk, Richard  "Military Tries to Sever Booze, Sex Assault Link," Military com, July 8, 2013, at http://www military com/daily-news/2013/07/08/military-tries-to-sever-booze-sex-assault-link html Watson, Julie  "Military Works to Change Culture to Combat Rape," Associated Press, July 15, 2013, at http://www military com/daily-news/2013/07/15/military-works-to-change-culture-to-combat-rape html Olson, Wyatt  "IG Review Finds Deficiencies in Sex Assault Cases," Stars and Stripes, July 16, 2013, at http://www military com/daily-news/2013/07/16/ig-review-finds-deficiencies-in-sex-assault-cases html Shanker, Thom  "New Support for Military in Sex Cases," New York Times , July 24, 2013, at http://www nytimes com/2013/07/25/us/politics/new-support-for-military-in-sex-cases html Taranto, James  "A Strange Sort of Justice at West Point," The Wall Street Journal, July 26, 2013, at https://www wsj com/articles/a-strange-sort-of-justice-at-west-point-1376453937 Cassata, Donna, "Senator Targets Military Law over Sexual Assault," Associated Press, July 29, 2013, at http://www military com/daily-news/2013/07/29/senator-targets-military-law-over-sexual-assault html?comp=7000023317843&rank=3 Groer, Annie  " Military brass claim progress in pursuing sexual assault cases ," Washington Post, August 1, 2013, at https://www washingtonpost com/blogs/she-the-people/wp/2013/08/01/military-brass-claim-progress-in-pursing-sexual-assault-cases/?utm_term= 72e55e7e218c Jennifer Koons  "Sexual Assault in the Military: Can the Pentagon stem the rise in incidents?" CQ Researcher , vol  23, no  29 (A ugust 9, 2013 ), p p  693-716   Laird, Lorelei  " Military lawyers confront changes as sexual assault becomes big news ," ABA (American Bar Association) Journal , September 2013, at http://www abajournal com/magazine/article/military_lawyers_confront_changes_as_sexual_assault_becomes_big_news/ Jelinek, Pauline  " Pentagon: Reports of Sexual Assault Up 46 Percent ," Associated Press, November 8, 2013, at http://www military com/daily-news/2013/11/08/pentagon-reports-of-sexual-assault-up-46-percent html Matthews, Michael F  " The Untold Story of Military Sexual Assault ," The New York Times, November 24, 2013, at http://www nytimes com/2013/11/25/opinion/the-untold-story-of-military-sexual-assault html " Men Sexually Assaulted in the Military Speak Out ," Baltimore Sun, December 20, 2013, at http://www military com/daily-news/2013/12/20/men-sexually-assaulted-in-the-military-speak-out html Kageyama, Yuri and Richard Lardner  "Documents Reveal Chaotic Military Sex-Abuse Record," Associated Press, February 10, 2014, at http://www military com/daily-news/2014/02/10/documents-reveal-chaotic-military-sex-abuse-record html Montgomery, Nancy  "AF Program Rare Bright Spot in Sex Assault Fight," Stars and Stripes , February 27, 2014, at http://www military com/daily-news/2014/02/27/air-force-program-rare-bright-spot-in-sex-assault-fight html Cox, Matthew  "Alcohol Policies Reviewed as Sex Assault Rises," Military com, May 1, 2014, at http://www military com/daily-news/2014/05/01/alcohol-policies-reviewed-as-sex-assault-rises html Burns, Robert  "Army Knocks 2-Star Down to 1-Star Rank," Associated Press, August 27, 2014, at http://www military com/daily-news/2014/08/27/army-knocks-2-star-down-to-1-star-rank html Milham, Matt  "Army: It's Good News That Sexual Assault Reports Are Up," Stars and Stripes , September 26, 2014, at http://www military com/daily-news/2014/09/26/army-its-good-news-that-sexual-assault-reports-are-up html Draper, Robert  The Military's Rough Justice on Sexual Assault," New York Times , November 26, 2014, at https://www nytimes com/2014/11/30/magazine/the-militarys-rough-justice-on-sexual-assault html Sisk, Richard  "Sexual Assault Reports Increase 8%, Pentagon Cites Progress," Military com, December 4, 2014, at http://www military com/daily-news/2014/12/04/sexual-assault-reports-increase-8-pentagon-cites-progress html Baldor, Lolita C  "Male Military Sex Assault Victims Slow to Complain," Associated Press, December 9, 2014, at http://www military com/daily-news/2014/12/09/male-military-sex-assault-victims-slow-to-complain html Roulo, Claudette  "Sexual Assault Rates Decrease at Military Service Academies," DOD News, Defense Media Activity, February 11, 2015, at http://archive defense gov/news/newsarticle aspx?id=128158 Pellerin, Cheryl  "DOD Honors Sexual Assault Response Coordinators," DOD News, April 23, 2015, at https://www defense gov/News/Article/Article/604510/ Rowe, Major Derek  "General courts-martial for sexual assault: How do they work?" Air Force News , April 28, 2015, at http://www af mil/News/Commentaries/Display/Article/586763/general-courts-martial-for-sexual-assault-how-do-they-work/ Sisk, Richard  "Military Sexual Assault Reports Increased 11 Percent Last Year," Military com, May 1, 2015, at http://www military com/daily-news/2015/05/01/military-sexual-assault-reports-increased-11-percent-last-year html Johnson, Lieutenant General Michelle D , U S  Air Force Academy superintendent; Vice Admiral Walter E  "Ted" Carter Jr , superintendent, U S  Naval Academy; Lieutenant General Robert L  Caslen, superintendent, U S  Military Academy; Rear Admiral James A  Helis, superintendent, U S  Merchant Marine Academy; Rear Admiral Sandra L  Stosz, superintendent, U S  Coast Guard Academy  "Lessons to Share: The five superintendents of federal service academies discuss how their institutions -- which faced scrutiny over sexual assault before many other colleges attracted such attention -- have responded to the issue," Inside Higher Ed, May 7, 2015, at https://www insidehighered com/views/2015/05/07/essay-how-federal-service-academics-prevent-and-punish-sexual-assault Tilghman, Andrew  "Military sexual assault claims: 1 in 20 lead to jail time," Military Times, May 13, 2015, at https://www militarytimes com/2015/05/13/military-sexual-assault-claims-1-in-20-lead-to-jail-time/ Schogol, Jeff  "Defense seeks dismissal of sexual assault case transferred to Washington," Air Force Times, October 17, 2015, at https://www airforcetimes com/news/your-air-force/2015/10/17/defense-seeks-dismissal-of-sexual-assault-case-transferred-to-washington/ Whitlock, Craig  "In the war against sexual assault, the Army keeps shooting itself in the foot," Washington Post, December 19, 2015, at https://www washingtonpost com/news/checkpoint/wp/2015/12/19/in-the-war-against-sexual-assault-the-army-keeps-shooting-itself-in-the-foot/?utm_term= d856136e939b Defense Media Activity  "Defense Department Proposes UCMJ Changes," DOD News, December 28, 2015, at https://www defense gov/News/Article/Article/638108/defense-department-proposes-ucmj-changes/ Losey, Stephen  "USAF launches new strategy to curb sexual assault," Air Force Times, December 30, 2015, at https://www airforcetimes com/news/your-air-force/2015/12/30/usaf-launches-new-strategy-to-curb-sexual-assault/ Kime, Patricia  "Sexual assault reporting rises at U S  service academies," Military Times , January 8, 2016, at https://www militarytimes com/news/your-military/2016/01/08/sexual-assault-reporting-rises-at-u-s-service-academies/ Larter, David B  "Navy sex assault victims may be eligible for early separation," Navy Times, January 20, 2016, at https://www navytimes com/news/your-navy/2016/01/20/navy-sex-assault-victims-may-be-eligible-for-early-separation/ Cox, John Woodrow  "Why sex assault reports have spiked at the Naval Academy, West Point and the Air Force Academy, Washington Post , March 11, 2016, at https://www washingtonpost com/news/checkpoint/wp/2016/03/11/why-sex-assault-reports-have-spiked-at-the-naval-academy-west-point-and-the-air-force-academy/?utm_term= a5e15f2f16f1 Whitlock, Craig, Thomas Gibbons-Neff  "Military bringing more charges against ofﬁcers for sexual assault," Washington Post, March 20, 2016, at https://www stripes com/news/us/military-bringing-more-charges-against-of%EF%AC%81cers-for-sexual-assault-1 400140# WeTFNOFRXUc Lardner, Richard  "Pentagon misled lawmakers on military sexual assault cases," Associated Press , April 18, 2016, at https://apnews com/23aed8a571f64a9d9c81271f0c6ae2fa/pentagon-misled-lawmakers-military-sexual-assault-cases Kheel, Rebecca  "Senators ask Obama to investigate whether Pentagon misled Congress," The Hill, April 19, 2016, at http://thehill com/policy/defense/276832-senators-ask-obama-to-investigate-pentagons-sexual-assault-comments Secretary of the Air Force Public Affairs  "Air Force report on sexual assault highlights program's progress," Air Force News , May 05, 2016, at http://www af mil/News/Article-Display/Article/752653/air-force-report-on-sexual-assault-highlights-programs-progress/ Tilghman, Andrew  "Military sex assault: Just 4 percent of complaints result in convictions," Military Times , May 5, 2016, at https://www militarytimes com/veterans/2016/05/05/military-sex-assault-just-4-percent-of-complaints-result-in-convictions/ Montgomery, Nancy  "US Military Court Addresses 'Incapable of Consent' to Sex Issue," Stars and Stripes , May 18, 2016, at http://www military com/daily-news/2016/05/18/us-military-court-addresses-incapable-of-consent-to-sex-issue html Losey, Stephen  "Military must do right by wrongly-discharged sexual assault victims, advocates say," Air Force Times , May 19, 2016, at https://www airforcetimes com/news/your-air-force/2016/05/19/military-must-do-right-by-wrongly-discharged-sexual-assault-victims-advocates-say/ Lyle, Amaani  "DoD Safe Helpline Offers Specialized Support to Sexual Assault Victims," DOD News, July 15, 2016, at https://dod defense gov/News/Article/Article/841166/dod-safe-helpline-offers-specialized-support-to-sexual-assault-victims/ Rein, Lisa  "Merchant Marine Academy under fire for sexual assault allegations," Stars and Stripes, August 12, 2016, at https://www stripes com/news/us/merchant-marine-academy-under-fire-for-sexual-assault-allegations-1 423595 Lyle, Amaani  "DoD Unveils Plan to Broaden Sexual Assault Support to Men," DOD News, Defense Media Activity, December 15, 2016, at https://www defense gov/News/Article/Article/1030795/dod-unveils-plan-to-broaden-sexual-assault-support-to-men/ The following sources are listed in alphabetical order by author  Burgess, Ann W , Donna M  Slattery, and Patricia A  Herlihy  "Military Sexual Trauma: A Silent Syndrome " Journal of Psychosocial Nursing & Mental Health Services 51, no  2 (2013): 20-6  D'Ambrosio-Woodward, Tricia  "Military Sexual Assault: A Comparative Legal Analysis of the 2012 Department of Defense Report on Sexual Assault in the Military: What It Tells Us, What It Doesn't Tell Us, and How Inconsistent Statistic Gathering Inhibits Winning the 'Invisible War '" Wisconsin Journal of Law, Gender & Society 29, no  2 (2014): 173-211  Farris, Coreen, Terry L  Schell and Terri Tanielian  Physical and Psychological Health Following Military Sexual Assault: Recommendations for Care, Research, and Policy   Santa Monica, CA: RAND Corporation, 2013  http://www rand org/pubs/occasional_papers/OP382 Firestone, Juanita M , J  M  Miller, and Richard Harris  "Implications for Criminal Justice from the 2002 and 2006 Department of Defense Gender Relations and Sexual Harassment Surveys " American Journal of Criminal Justice : AJCJ 37, no  3 (2012): 432-451  Gibson, Carolyn J , Kristen E  Gray, Jodie G  Katon, Tracy L  Simpson, and Keren Lehavot  "Sexual Assault, Sexual Harassment, and Physical Victimization during Military Service across Age Cohorts of Women Veterans " Women's Health Issues 26, no  2 (2016): 225-231  Harrell, Margaret C , Laura Werber, Marisa Adelson, Sarah J  Gaillot, Charlotte Lynch and Amanda Pomeroy  A Compendium of Sexual Assault Research   Santa Monica, CA: RAND Corporation, 2009  http://www rand org/pubs/technical_reports/TR617 Holland, Kathryn, Rabelo, Verónica, and Cortina, Lilia  Sexual Assault Training in the Military: Evaluating Efforts to End the 'Invisible War ' American Journal of Community Psychology 54, no  3/4 (2014): 289-303  Morral, Andrew R , Kristie Gore, and Terry L  Schell  Sexual Assault and Sexual Harassment in the U S  Military, Volume 1  Design of the 2014 RAND Military Workplace Study   Santa Monica, CA: RAND Corporation, National Defense Research Institute, 2014  https://www rand org/pubs/research_briefs/RB9841 html Morral, Andrew R , Kristie Gore, and Terry L  Schell  Sexual Assault and Sexual Harassment in the U S  military: Volume 2  Estimates for Department of Defense Service members from the 2014 RAND Military Workplace Study   Santa Monica, CA: RAND Corporation, National Defense Research Institute, 2015  https://www rand org/pubs/research_reports/RR870z2-1 html O'Brien, Carol, Jessica Keith, and Lisa Shoemaker  "Don't Tell: Military Culture and Male Rape " Psychological Services 12, no  4 (2015): 357-365  Stander, Valeria A  and Cynthia J  Thomsen  "Sexual Harassment and Assault in the U S  Military: A Review of Policy and Research Trends " AMSUS Military Medicine (Association of Military Surgeons of the United States) 181, no  1S (2016): 20-27  This chronological list of hearings was compiled from Congress gov and CQ com  U S  Congress, House Armed Services Committee, A Review of Sexual Misconduct by Basic Training Instructors at Lackland Air Force Base , 113 th Cong , 1 st sess , January 23, 2013, H A S C  No  113-2 (Washington, DC: GPO, 2013)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2014 , Part 1, 113th Cong , 1 st sess , February 26, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Armed Services Committee, Subcommittee on Personnel, Testimony on Sexual Assault in the Military, 113 th Cong , 1 st sess , March 13, 2013, S  Hrg  113-303 (Washington, DC: GPO, 2013)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong , 1 st sess , April 17, 2013 (Washington, DC: GPO, 2013)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2014, Part 2 , 113th Cong , 1 st sess , April 24, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong , 1 st sess , April 24, 2013 (Washington, DC: GPO, 2013)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U S  Navy and Marine Corps , 113 th Cong , 1 st sess , May 7, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Armed Services Committee, D epartment of Defense Authorization for Appropriations for Fiscal Year 2014 and the Future Years Defense Program , 113 th Cong , 1 st sess , May 7, 2013 (Washington, DC: GPO, 2013)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U S  Army , 113 th Cong , 1 st sess , May 8, 2013  (Washington, DC: GPO, 2013)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U S  Air Force , 113 th Cong , 1 st sess , May 8, 2013 (Washington, DC: GPO, 2013)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U S  Air Force , 113 th Cong , 1 st sess , May 9, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong , 1 st sess , May 22, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Armed Services Committee, Pending Legislation Regarding Sexual Assaults in the Military , 113 th Cong , 1 st sess , June 4, 2013, S  Hrg  113–320 (Washington, DC: GPO, 2013)  U S  Congress, Senate Armed Services Committee, Subcommittee on Personnel, Markup of the National Defense Authorization Act for Fiscal Year 2014 , 113 th Cong , 1 st sess , June 11, 2013 (Washington, DC: GPO, 2013)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong , 1 st sess , June 11, 2013 (Washington, DC: GPO, 2013)  U S  Congress, House Armed Services Committee, Subcommittee on Military Personnel, Women in Service Review s , 113 th Cong , 1 st sess , July 24, 2013, H A S C  No  113–50 (Washington, DC: GPO, 2013)  U S  Congress , Senate Armed Services Committee, Subcommittee on Personnel, The Relationships Between Military Sexual Assault, Post-Traumatic Stress Disorder and Suicide, and on Department of Defense and Department of Veterans Affairs Medical Treatment and Management of Victims of Sexual Trauma , 113 th Cong , 2 nd sess , February 26, 2014, S  Hrg  113-480 (Washington, DC: GPO, 2013)   U S  Congress, Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of Defense , 113 th Cong , 2 nd sess , March 6 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Armed Services Committee, Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Navy , 113 th Cong , 2 nd sess , March 12 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2015, Part 1 , 113 th Cong , 2 nd sess , March 13, 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Air Force , 113 th Cong  , 2 nd sess , March 14, 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Army , 113 th Cong , 2 nd sess , March 25 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong , 2 nd sess , March 26 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Appropriations Committee, Subcommittee , Department of Defense Appropriations for 2015 , Part 2, 113 th Cong , 2 nd sess , April 2, 2014, (Washington, DC: GPO, 2014)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong , 2 nd sess , April 2 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, House Armed Services Committee , National Defense Priorities from the Members for the Fiscal Year 2015 National Defense Authorization Act , 113 th Cong  , 2 nd sess , April 9 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2015 , 113th Cong , 2 nd sess , April 9, 2014 (Washington, DC: GPO, 2014)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2015 , 113th Cong , 2 nd sess , April 30, 2014 (Washington, DC: GPO, 2014)  U S  Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong , 2 nd sess , June 18 , 2014 (Washington, DC: GPO, 2014)  U S  Congress, Senate Armed Services Committee , Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 1 , 114th Cong , 1 st sess , March 3 , 10 , 12 , 18 , 19, 26, April 4, 30 , 2015 (Washington, DC: GPO, 2015)  U S  Congress, Senate Armed Services , Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 7 Strategic Forces, 114 th Cong , 1 st sess , March 4, 25, April 15, 22, 29 , 2015 (Washington, DC: GPO, 2015)  U S  Congress, Senate Armed Services Committee, Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 3 Readiness and Management Support, 114 th Cong , 1 st sess , March 11, 25, April 22, 2015 (Washington, DC: GPO, 2015)  U S  Congress, Senate Armed Services Committee, The Current State of Readiness of U S  Forces in Review of the Defense Authorization Request for Fiscal Year 2016 and the Future Years Defense Program , 114 th Cong , 1 st sess , March 25, 2015 (Washington, DC: GPO, 2015)  U S  Congress, Senate Armed Services Committee, Department of Defense Authorization for Appropriations for Fiscal Year 2017 and the Future Years Defense Program , Part 1 , 114 th Cong , 2 nd sess , February 11, 23, March 3, 10, 15, 17, April 5, 7, 26, 2016 (Washington, DC: GPO, 2016)  U S  Congress, House Armed Services Committee, The Fiscal Year 2017 Na tional Defense Authorization Budget Request from the Department of Defense , 114 th Cong , 2 nd sess , March 22, 2016 (Washington, DC: GPO, 2016)  U S  Congress, Senate Armed Services Committee, Subcommittee on Strategic Forces, The Current State of Research, Diagnosis, and Treatment for Post-Traumatic Stress Disorder and Traumatic Brain Injury , 114 th Cong , 2 nd sess , April 20, 2016 (Washington, DC: GPO, 2016)  U S  Congress, House Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2014 on H R 1960 with Additional and Dissenting Views, 113 th Cong , 1 st sess , H  Rept  113-102 (Washington, DC: GPO, 2013)  U S  Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2014 to Accompany H R  2397 together with Additional Views, 113 th Cong , 1 st sess , H  Rept  113-113 (Washington, DC: GPO, 2013)  U S  Congress, Senate Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2014 to accompany S  1197, 113 th Cong , 1 st sess , S  Rept  113-44 (Washington, DC: GPO, 2013)  U S  Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2014 to accompany S 1429, 113 th Cong , 1 st sess , S  Rept  113-85 (Washington, DC: GPO, 2013)  U S  Congress, House Committee on Armed Services, First Annual Report on the Activities of the Committee on Armed Services for the One Hundred Thirteenth Congress , 113 th Cong , 1 st sess , H  Rept  113-309 (Washington, DC: GPO, 2013)  U S  Congress, House Committee on Armed Services, Howard P  "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 to accompany H R 4435, 113 th Cong, 2 nd sess , H  Rept  113-446 (Washington, DC: GPO, 2014)  U S  Congress, House Committee on Armed Services, Howard P  "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 supplemental report to accompany H R 4435, 113 th Cong  2 nd sess , H  Rept  113-446 part 2 (Washington, DC: GPO, 2014)  U S  Congress, Senate Committee on Armed Services, Carl Levin National Defense Authorization Act for Fiscal Year 2015 to accompany S 2410, 113 th Cong, 2 nd sess , S  Rept  113-176 (Washington, DC: GPO, 2014)  U S  Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2015 to accompany H R 4870, 113 th Cong , 2 nd sess , H  Rept  113-473 (Washington, DC: GPO, 2014)  U S  Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2015 to accompany H R 4870, 113 th Cong , 2 nd sess , S  Rept  113-211 (Washington, DC: GPO, 2014)  U S  Congress, House Committee on Armed Service, National Defense Authorization Act for Fiscal Year 2016 to accompany H R 1735, 114 th Cong , 1 st sess , H  Rept  114-102 (Washington, DC: GPO, 2015)  U S  Congress, Senate Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2016 to accompany S 1376, 114 th Cong , 1 st sess , S  Rept  114-49 (Washington, DC: GPO, 2015)  U S  Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2016 to accompany H R 2685, 114 th Cong , 1 st sess , H  Rept  114-139 (Washington, DC: GPO, 2015)  U S  Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2016 to accompany S 1558, 114 th Cong , 1 st sess , S  Rept  114-63 (Washington, DC: GPO, 2015)  U S  Congress, House Conference Report, National Defense Authorization Act for Fiscal Year 2016 to accompany H R 1735, 114 th Cong , 1 st sess , H  Rept  114-270 (Washington, DC: GPO, 2015)  U S  Congress, House Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2017 on H R 4909, 114 th Cong , 2 nd sess , H  Rept  114-537 (Washington, DC: GPO, 2016)  U S  Congress, Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2017 to accompany S 2943, 114 th Cong, 2 nd sess , S  Rept  114-255 (Washington, DC: GPO, 2016)  U S  Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2017 to accompany H R 5293, 114 th Cong , 2 nd sess , H  Rept  114-577 (Washington, DC: GPO, 2016)  U S  Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2017 to accompany S 3000, 114 th Cong , 2 nd sess , S  Rept  114-263 (Washington, DC: GPO, 2016)  U S  Congress, House Conference Report, National Defense Authorization Act for Fiscal Year 2017 to accompany S  2943, 114 th Cong, 2 nd sess , H  Rept  114-840 (Washington, DC: GPO, 2016) 

ground_truth: Multiyear procurement (MYP) and block buy contracting (BBC) are special contracting mechanisms that Congress permits the Department of Defense (DOD) to use for a limited number of defense acquisition programs. Compared to the standard or default approach of annual contracting, MYP and BBC have the potential for reducing weapon procurement costs by a few or several percent. Under annual contracting, DOD uses one or more contracts for each year's worth of procurement of a given kind of item. Under MYP, DOD instead uses a single contract for two to five years' worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. DOD needs congressional approval for each use of MYP. There is a permanent statute governing MYP contracting—10 U.S.C. 2306b. Under this statute, a program must meet several criteria to qualify for MYP. Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%. In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract due to changes in the program independent of the use of MYP rather than annual contracting. BBC is similar to MYP in that it permits DOD to use a single contract for more than one year's worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. BBC is also similar to MYP in that DOD needs congressional approval for each use of BBC. BBC differs from MYP in the following ways: There is no permanent statute governing the use of BBC. There is no requirement that BBC be approved in both a DOD appropriations act and an act other than a DOD appropriations act. Programs being considered for BBC do not need to meet any legal criteria to qualify for BBC, because there is no permanent statute governing the use of BBC that establishes such criteria. A BBC contract can cover more than five years of planned procurements. Economic order quantity (EOQ) authority—the authority to bring forward selected key components of the items to be procured under the contract and purchase the components in batch form during the first year or two of the contract—does not come automatically as part of BBC authority because there is no permanent statute governing the use of BBC that includes EOQ authority as an automatic feature. BBC contracts are less likely to include cancellation penalties. Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP; and whether the Coast Guard should begin making use of MYP and BBC.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: This report provides background information and issues for Congress on multiyear procurement (MYP) and block buy contracting (BBC), which are special contracting mechanisms that Congress permits the Department of Defense (DOD) to use for a limited number of defense acquisition programs  Compared to the standard or default approach of annual contracting, MYP and BBC have the potential for reducing weapon procurement costs by a few or several percent  Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP; and whether the Coast Guard should begin making use of MYP and BBC  Congress's decisions on these issues could affect defense acquisition practices, defense funding requirements, and the defense industrial base  A contract that the Air Force has for the procurement of Evolved Expendable Launch Vehicle (EELV) Launch Services (ELS) has sometimes been referred to as a block buy, but it is not an example of block buy contracting as discussed in this report  The Air Force in this instance is using the term block buy to mean something different  This report does not discuss the ELS contract  (For additional discussion, see " Terminology Alert: Block Buy Contracting vs  Block Buys " below ) In discussing MYP, BBC, and incremental funding, it can be helpful to distinguish contracting mechanisms from funding approaches  The two are often mixed together in discussions of DOD acquisition, sometimes leading to confusion  Stated briefly Funding approaches are ways that Congress can appropriate funding for weapon procurement programs, so that DOD can then put them under contract  Examples of funding approaches include traditional full funding (the standard or default approach), incremental funding, and advance appropriations  Any of these funding approaches might make use of advance procurement (AP) funding  Contracting mechanisms are ways for DOD to contract for the procurement of weapons systems, once funding for those systems has been appropriated by Congress  Examples of contracting mechanisms include annual contracting (the standard or default DOD approach), MYP, and BBC  Contracting mechanisms can materially change the total procurement cost of a ship  The use of a particular funding approach in a defense acquisition program does not dictate the use of a particular contracting mechanism  Defense acquisition programs consequently can be implemented using various combinations of funding approaches and contracting mechanisms  Most DOD weapon acquisition programs use a combination of traditional full funding and annual contracting  A few programs, particularly certain Navy shipbuilding programs, use incremental funding as their funding approach  A limited number of DOD programs use MYP as their contracting approach, and to date three Navy shipbuilding programs have used BBC as their contracting approach  The situation is summarized in Table 1   This report focuses on the contracting approaches of MYP and BBC and how they compare to annual contracting  Other CRS reports discuss the funding approaches of traditional full funding, incremental funding, and advance appropriations  What is MYP, and how does it differ from annual contracting? MYP, also known as multiyear contracting, is an alternative to the standard or default DOD approach of annual contracting  Under annual contracting, DOD uses one or more contracts for each year's worth of procurement of a given kind of item  Under MYP, DOD instead uses a single contract for two to five years' worth of procurement of a given kind of item, without having to exercise a contract option for each year after the first year  DOD needs congressional approval for each use of MYP  To illustrate the basic difference between MYP and annual contracting, consider a hypothetical DOD program to procure 20 single-engine aircraft of a certain kind over the 5-year period FY2018-FY2022, at a rate of 4 aircraft per year: Under annual contracting , DOD would issue one or more contracts for each year's procurement of four aircraft  After Congress funds the procurement of the first four aircraft in FY2018, DOD would issue one or more contracts (or exercise a contract option) for those four aircraft  The next year, after Congress funds the procurement of the next four aircraft in FY2019, DOD would issue one or more contracts (or exercise a contract option) for those four aircraft, and so on  Under MYP , DOD would issue one contract covering all 20 aircraft to be procured during the 5-year period FY2018-FY2022  DOD would award this contract in FY2018, at the beginning of the five-year period, following congressional approval to use MYP for the program, and congressional appropriation of the FY2018 funding for the program  To continue the implementation of the contract over the next four years, DOD would request the FY2019 funding for the program as part of DOD's proposed FY2019 budget, the FY2020 funding as part of DOD's proposed FY2020 budget, and so on  How much can MYP save? Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%  In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract that was caused by developments independent of the use of MYP rather than annual contracting  A February 2012 briefing by the Cost Assessment and Program Evaluation (CAPE) office within the Office of the Secretary of Defense (OSD) states that "MYP savings analysis is difficult due to the lack of actual costs on the alternative acquisition path, i e , the path not taken " The briefing states that CAPE up to that point had assessed MYP savings for four aircraft procurement programs—F/A-18E/F strike fighters, H-60 helicopters, V-22 tilt-rotor aircraft, and CH-47F helicopters—and that CAPE's assessed savings ranged from 2% to 8%  A 2008 Government Accountability Office (GAO) report stated that DOD does not have a formal mechanism for tracking multiyear results against original expectations and makes few efforts to validate whether actual savings were achieved by multiyear procurement  It does not maintain comprehensive central records and historical information that could be used to enhance oversight and knowledge about multiyear performance to inform and improve future multiyear procurement (MYP) candidates  DOD and defense research centers officials said it is difficult to assess results because of the lack of historical information on multiyear contracts, comparable annual costs, and the dynamic acquisition environment  How does MYP potentially save money? Compared to annual contracting, using MYP can in principle reduce the cost of the weapons being procured in two primary ways: Contractor optimization of workforce and production facilities   An MYP contract gives the contractor (e g , an airplane manufacturer or shipbuilder) confidence that a multiyear stream of business of a known volume will very likely materialize  This confidence can permit the contractor to make investments in the firm's workforce and production facilities that are intended to optimize the facility for the production of the items being procured under the contract  Such investments can include payments for retaining or training workers, or for building, expanding, or modernizing production facilities  Under annual contracting, the manufacturer might not have enough confidence about its future stream of business to make these kinds of investments, or might be unable to convince its parent firm to finance them  E conomic order quan tity (EOQ) purchases of selected long-leadtime components  Under an MYP contract, DOD is permitted to bring forward selected key components of the items to be procured under the contract and to purchase the components in batch form during the first year or two of the contract  In the hypothetical example introduced earlier, using MYP could permit DOD to purchase, say, the 20 engines for the 20 aircraft in the first year or two of the 5-year contract  Procuring selected components in this manner under an MYP contract is called an economic order quantity (EOQ) purchase  EOQ purchases can reduce the procurement cost of the weapons being procured under the MYP contract by allowing the manufacturers of components to take maximum advantage of production economies of scale that are possible with batch orders  What gives the contractor confidence that the multiyear stream of business will materialize? At least two things give the contractor confidence that DOD will not terminate an MYP contract and that the multiyear stream of business consequently will materialize: For a program to qualify for MYP, DOD must certify, among other things, that the minimum need for the items to be purchased is expected to remain substantially unchanged during the contract in terms of production rate, procurement rate, and total quantities  Perhaps more important to the contractor, MYP contracts include a cancellation penalty intended to reimburse a contractor for costs that the contractor has incurred (i e , investments the contractor has made) in anticipation of the work covered under the MYP contract  The undesirability of paying a cancellation penalty acts as a disincentive for the government against canceling the contract  (And if the contract is canceled, the cancellation penalty helps to make the contractor whole ) Is there a permanent statute governing MYP contracting? There is a permanent statute governing MYP contracting—10 U S C  2306b  The statute was created by Section 909 of the FY1982 Department of Defense Authorization Act ( S  815 / P L  97-86 of December 1, 1981), revised and reorganized by Section 1022 of the Federal Acquisition Streamlining Act of 1994 ( S  1587 / P L  103-355 of October 13, 1994), and further amended on several occasions since  For the text of 10 U S C  2306b, see Appendix A   DOD's use of MYP contracting is further governed by DOD acquisition regulations  Under this statute, what criteria must a program meet to qualify for MYP? 10 U S C  2306b(a) states that to qualify for MYP, a program must meet several criteria, including the following: Significant savings  DOD must estimate that using an MYP contract would result in "significant savings" compared with using annual contracting  Realistic cost estimates   DOD's estimates of the cost of the MYP contract and the anticipated savings must be realistic  Stable need for the items  DOD must expect that its minimum need for the items will remain substantially unchanged during the contract in terms of production rate, procurement rate, and total quantities  Stable design for the items   The design for the items to be acquired must be stable, and the technical risks associated with the items must not be excessive  10 U S C  includes provisions requiring the Secretary of Defense or certain other DOD officials to find, determine, or certify that these and other statutory requirements for using MYP contracts have been met, and provisions requiring the heads of DOD agencies to provide written notifications of certain things to the congressional defense committees 30 days before awarding or initiating an MYP contract, or 10 days before terminating one  10 U S C  2306b also requires DOD MYP contracts to be fixed-price type contracts  What is meant by " significant savings"? The amount of savings required under 10 U S C  2306b to qualify for using an MYP contract has changed over time; the requirement was changed from "substantial savings" to "significant savings" by Section 811 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015)  The joint explanatory statement for the FY2016 National Defense Authorization Act states the following regarding Section 811: Amendment relating to multiyear contract authority for acquisition of property (sec  811) The House bill contained a provision (sec  806) that would strike the existing requirement that the head of an agency must determine that substantial savings would be achieved before entering into a multiyear contract  The Senate amendment contained no similar provision  The Senate recedes with an amendment that would require that significant savings would be achieved before entering into a multiyear contract  The conferees agree that the government should seek to maximize savings whenever it pursues multiyear procurement  However, the conferees also agree that significant savings (estimated to be greater than $250 0 million), and other benefits, may be achieved even if it does not equate to a minimum of 10 percent savings over the cost of an annual contract  The conferees expect a request for authority to enter into a multiyear contract will include (1) the estimated cost savings, (2) the minimum quantity needed, (3) confirmation that the design is stable and the technical risks are not excessive, and (4) any other rationale for entering into such a contract  In addition, 10 U S C  2306b states the following: If for any fiscal year a multiyear contract to be entered into under this section is authorized by law for a particular procurement program and that authorization is subject to certain conditions established by law (including a condition as to cost savings to be achieved under the multiyear contract in comparison to specified other contracts) and if it appears (after negotiations with contractors) that such savings cannot be achieved, but that significant savings could nevertheless be achieved through the use of a multiyear contract rather than specified other contracts, the President may submit to Congress a request for relief from the specified cost savings that must be achieved through multiyear contracting for that program  Any such request by the President shall include details about the request for a multiyear contract, including details about the negotiated contract terms and conditions  What is meant by "stable design"? The term "stable design" is generally understood to mean that the design for the items to be procured is not expected to change substantially during the period of the contract  Having a stable design is generally demonstrated by having already built at least a few items to that design (or in the case of a shipbuilding program, at least one ship to that design) and concluding, through testing and operation of those items, that the design does not require any substantial changes during the period of the contract  What happens if Congress does not provide the annual funding requested by DOD to continue the implementation of the contract? If Congress does not provide the funding requested by DOD to continue the implementation of an MYP contract, DOD would be required to renegotiate, suspend, or terminate the contract  Terminating the contract could require the government to pay a cancellation penalty to the contractor  Renegotiating or suspending the contract could also have a financial impact  What effect does using MYP have on flexibility for making procurement changes? A principal potential disadvantage of using MYP is that it can reduce Congress's and DOD's flexibility for making changes (especially reductions) in procurement programs in future years in response to changing strategic or budgetary circumstances, at least without incurring cancellation penalties  In general, the greater the portion of DOD's procurement account that is executed under MYP contracts, the greater the potential loss of flexibility  The use of MYP for executing some portion of the DOD procurement account means that if policymakers in future years decide to reduce procurement spending below previously planned levels, the spending reduction might fall more heavily on procurement programs that do not use MYP, which in turn might result in a less-than-optimally balanced DOD procurement effort  How does Congress approve the use of MYP? Congress approves the use of MYP on a case-by-case basis, typically in response to requests by DOD  Congressional approval for DOD MYP contracts with a value of more than $500 million must occur in two places: an annual DOD appropriations act and an act other than the annual DOD appropriations act  In annual DOD appropriations acts, the provision permitting the use of MYP for one or more defense acquisition programs is typically included in the title containing general provisions, which typically is Title VIII  As shown in Table B-2 , since FY2011, it has been Section 8010  An annual national defense authorization act (NDAA) is usually the act other than an appropriations act in which provisions granting authority for using MYP contracting on individual defense acquisition programs are included  Such provisions typically occur in Title I of the NDAA, the title covering procurement programs  Provisions in which Congress approves the use of MYP for a particular defense acquisition program may include specific conditions for that program in addition to the requirements and conditions of 10 U S C  2306b  How often is MYP used? MYP is used for a limited number of DOD acquisition programs  As shown in the Appendix B , annual DOD appropriations acts since FY1990 typically have approved the use of MYP for zero to a few DOD programs each year  An August 28, 2017, press report states the following: The Pentagon's portfolio of active multiyear procurement contracts is on track to taper from $10 7 billion in fiscal year 2017—or more than 8 percent of DOD procurement spending—to $1 2 billion by FY-19, according to data recently compiled by the Pentagon comptroller for lawmakers  However, there are potential new block-buy deals in the works, including several large Navy deals  According to the Multiyear Procurement Contracts Report for FY-17, which includes data current as of June 27, seven major defense acquisition programs are being purchased through multiyear procurement contracts, collectively obligating the U S  government to spend $16 billion across the five-year spending plan with $14 5 billion of the commitments lashed to FY-17 and FY-18  In an interview published on January 13, 2014, Sean Stackley, the Assistant Secretary of the Navy for Research, Development, and Acquisition (i e , the Navy's acquisition executive), stated the following: What the industrial base clamors for is stability, so they can plan, invest, train their work force  It gives them the ability in working with say, the Street [Wall Street], to better predict their own performance, then meet expectations in the same fashion we try to meet our expectations with the Hill  It's emblematic of stability that we've got more multiyear programs in the Department of the Navy than the rest of the Department of Defense combined  We've been able to harvest from that significant savings, and that has been key to solving some of our budget problems  It's allowed us in certain cases to put the savings right back into other programs tied to requirements  A February 2012 briefing by the Cost Assessment and Program Evaluation (CAPE) office within the Office of the Secretary of Defense (OSD) shows that the total dollar value of DOD MYP contracts has remained more or less stable between FY2000 and FY2012 at roughly $7 billion to $13 billion per year  The briefing shows that since the total size of DOD's procurement budget has increased during this period, the portion of DOD's total procurement budget accounted for by programs using MYP contracts has declined from about 17% in FY2000 to less than 8% in FY2012  The briefing also shows that the Navy makes more use of MYP contracts than does the Army or Air Force, and that the Air Force made very little use of MYP in FY2010-FY2012  A 2008 Government Accountability Office (GAO) report stated the following: Although DOD had been entering into multiyear contracts on a limited basis prior to the 1980s, the Department of Defense Authorization Act, [for fiscal year] 1982, codified the authority for DOD to procure on a multiyear basis major weapon systems that meet certain criteria  Since that time, DOD has annually submitted various weapon systems as multiyear procurement candidates for congressional authorization  Over the past 25 years, Congress has authorized the use of multiyear procurement for approximately 140 acquisition programs, including some systems approved more than once  What is BBC, and how does it compare to MYP? BBC is similar to MYP in that it permits DOD to use a single contract for more than one year's worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year  BBC is also similar to MYP in that DOD needs congressional approval for each use of BBC  BBC differs from MYP in the following ways: There is no permanent statute governing the use of BBC  There is no requirement that BBC be approved in both a DOD appropriations act and an act other than a DOD appropriations act  Programs being considered for BBC do not need to meet any legal criteria to qualify for BBC because there is no permanent statute governing the use of BBC that establishes such criteria  A BBC contract can cover more than five years of planned procurements  The BBC contracts that were used by the Navy for procuring Littoral Combat Ships (LCSs), for example, covered a period of seven years (FY2010-FY2016)  Economic order quantity (EOQ) authority does not come automatically as part of BBC authority because there is no permanent statute governing the use of BBC that includes EOQ authority as an automatic feature  To provide EOQ authority as part of a BBC contract, the provision granting authority for using BBC in a program may need to state explicitly that the authority to use BBC includes the authority to use EOQ  BBC contracts are less likely to include cancellation penalties  Given the one key similarity between BBC and MYP (the use of a single contract for more than one year's worth of procurement), and the various differences between BBC and MYP, BBC might be thought of as a less formal stepchild of MYP  When and why was BBC invented? BBC was invented by Section 121(b) of the FY1998 National Defense Authorization Act ( H R  1119 / P L  105-85 of November 18, 1997), which granted the Navy the authority to use a single contract for the procurement of the first four Virginia (SSN-774) class attack submarines  The 4 boats were scheduled to be procured during the 5-year period FY1998-FY2002 in annual quantities of 1-1-0-1-1  Congress provided the authority granted in Section 121(b) at least in part to reduce the combined procurement cost of the four submarines  Using MYP was not an option for the Virginia-class program at that time because the Navy had not even begun, let alone finished, construction of the first Virginia-class submarine, and consequently could not demonstrate that it had a stable design for the program  When Section 121(b) was enacted, there was no name for the contracting authority it provided  The term block buy contracting came into use later, when observers needed a term to refer to the kind of contracting authority that Congress authorized in Section 121(b)  As discussed in the next section, this can cause confusion, because the term block buy was already being used in discussions of DOD acquisition to refer to something else  What's the difference between block buy cont r acting and block buys? In discussions of defense procurement, the term "block buy" by itself (without "contracting" at the end) is sometimes used to refer to something quite different from block buy contracting—namely, the simple act of funding the procurement of more than one copy of an item in a single year, particularly when no more than one item of that kind might normally be funded in a single year  For example, when Congress funded the procurement of two aircraft carriers in FY1983, and another two in FY1988, these acts were each referred to as block buys, because aircraft carriers are normally procured one at a time, several years apart from one another  This alternate meaning of the term block buy predates by many years the emergence of the term block buy contracting  The term block buy is still used in this alternate manner, which can lead to confusion in discussions of defense procurement  For example, for FY2017, the Air Force requested funding for procuring five Evolved Expendable Launch Vehicles (EELVs) for its EELV Launch Services (ELS) program  At the same time, Navy officials sometimes refer to the use of block buy contracts for the first four Virginia-class submarines, and in the LCS program, as block buys, when they might be more specifically referred to as instances of block buy contract ing   How much can BBC save, compared with MYP? BBC can reduce the unit procurement costs of ships by amounts less than or perhaps comparable to those of MYP, if the authority granted for using BBC explicitly includes authority for making economic order quantity (EOQ) purchases of components  If the authority granted for using BBC does not explicitly include authority for making EOQ purchases, then the savings from BBC will be less  Potential savings under BBC might also be less than those under MYP if the BBC contract does not include a cancellation penalty, or includes one that is more limited than typically found in an MYP contract, because this might give the contractor less confidence than would be the case under an MYP contract that the future stream of business will materialize as planned, which in turn might reduce the amount of money the contractor invests to optimize its workforce and production facilities for producing the items to be procured under the contract  How frequently has BBC been used? Since its use at the start of the Virginia-class program, BBC has been used very rarely  The Navy did not use it again in a shipbuilding program until December 2010, when it awarded two block buy contracts, each covering 10 LCSs to be procured over the six-year period FY2010-FY2015, to the two LCS builders  (Each contract was later amended to include an 11 th ship in FY2016, making for a total of 22 ships under the two contracts ) A third example is the John Lewis (TAO-205) class oiler program, in which the Navy is using a block buy contract to procure the first six ships in the program  A fourth example, arguably, is the Air Force's KC-46 aerial refueling tanker program, which is employing a fixed price incentive fee (FPIF) development contract that includes a "back end" commitment to procure certain minimum numbers of KC-46s in certain fiscal years  When might BBC be suitable as an alternative to MYP? BBC might be particularly suitable as an alternative to MYP in cases where using a multiyear contract can reduce costs, but the program in question cannot meet all the statutory criteria needed to qualify for MYP  As shown in the case of the first four Virginia-class boats, this can occur at or near the start of a procurement program, when design stability has not been demonstrated through the production of at least a few of the items to be procured (or, for a shipbuilding program, at least one ship)  What i s the difference between an MYP or block buy contract and a contract with options? The military services sometimes use contracts with options to procure multiple copies of an item that are procured over a period of several years  The Navy, for example, used a contract with options to procure Lewis and Clark (TAKE-1) class dry cargo ships that were procured over a period of several years  A contract with options can be viewed as somewhat similar to an MYP or block buy contract in that a single contract is used to procure several years' worth of procurement of a given kind of item  There is, however, a key difference between an MYP or block buy contract and a contract with options: In a contract with options, the service is under no obligation to exercise any of the options, and a service can choose to not exercise an option without having to make a penalty payment to the contractor  In contrast, in an MYP or block buy contract, the service is under an obligation to continue implementing the contract beyond the first year, provided that Congress appropriates the necessary funds  If the service chooses to terminate an MYP or block buy contract, and does so as a termination for government convenience rather than as a termination for contractor default, then the contractor can, under the contract's termination for convenience clause, seek a payment from the government for cost incurred for work that is complete or in process at the time of termination, and may include the cost of some of the investments made in anticipation of the MYP or block buy contract being fully implemented  The contractor can do this even if the MYP or block buy contract does not elsewhere include a provision for a cancellation penalty  As a result of this key difference, although a contract with options looks like a multiyear contract, it operates more like a series of annual contracts, and it cannot achieve the kinds of savings that are possible under MYP and BBC  Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; and whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP  Should MYP and BBC in the future be used more frequently, less frequently, or about as frequently as they are currently used? Supporters of using MYP and BBC more frequently in the future might argue the following: Since MYP and BBC can reduce procurement costs, making greater use of MYP and BBC can help DOD get more value out of its available procurement funding  This can be particularly important if DOD's budget in real (i e , inflation-adjusted) terms remains flat or declines in coming years, as many observers anticipate  The risks of using MYP have been reduced by Section 811 of the FY2008 National Defense Authorization Act ( H R  4986 / P L  110-181 of January 28, 2008), which amended 10 U S C  2306b to strengthen the process for ensuring that programs proposed for MYP meet certain criteria (see " Permanent Statute Governing MYP ")  Since the value of MYP contracts equated to less than 8% of DOD's procurement budget in FY2012, compared to about 17% of DOD's procurement budget in FY2000, MYP likely could be used more frequently without exceeding past experience regarding the share of DOD's procurement budget accounted for by MYP contracts  Supporters of using MYP and BBC less frequently in the future, or at least no more frequently than now, might argue the following: Using MYP and BBC more frequently would further reduce Congress's and DOD's flexibility for making changes in DOD procurement programs in future years in response to changing strategic or budgetary circumstances  The risks of reducing flexibility in this regard are increased now because of uncertainties in the current strategic environment and because efforts to reduce federal budget deficits could include reducing DOD spending, which could lead to a reassessment of U S  defense strategy and associated DOD acquisition programs  Since actual savings from using MYP and BBC rather than annual contracting can be difficult to observe or verify, it is not clear that the financial benefits of using MYP or BBC more frequently in the future would be worth the resulting further reduction in Congress's and DOD's flexibility for making changes in procurement programs in future years in response to changing strategic or budgetary circumstances  Should Congress create a permanent statute to govern the use of BBC, analogous to the permanent statute (10 U S C  2306b) that governs the use of MYP? Supporters of creating a permanent statute to govern the use of BBC might argue the following: Such a statute could encourage greater use of BBC, and thereby increase savings in DOD procurement programs by giving BBC contracting a formal legal standing and by establishing a clear process for DOD program managers to use in assessing whether their programs might be considered suitable for BBC  Such a statute could make BBC more advantageous by including a provision that automatically grants EOQ authority to programs using BBC, as well as provisions establishing qualifying criteria and other conditions intended to reduce the risks of using BBC  Opponents of creating a permanent statute to govern the use of BBC might argue the following: A key advantage of BBC is that it is not governed by a permanent statute  The lack of such a statute gives DOD and Congress full flexibility in determining when and how to use BBC for programs that may not qualify for MYP, but for which a multiyear contract of some kind might produce substantial savings  Such a statute could encourage DOD program managers to pursue their programs using BBC rather than MYP  This could reduce discipline in DOD multiyear contracting if the qualifying criteria in the BBC statute are less demanding than the qualifying criteria in 10 U S C  2306b  Should the Coast Guard should begin making use of MYP and BBC? Although the Coast Guard is part of the Department of Homeland Security (DHS), the Coast Guard is a military service and a branch of the U S  Armed Forces at all times (14 U S C  1), and 10 U S C  2306b provides authority for using MYP not only to DOD, but also to the Coast Guard (and the National Aeronautics and Space Administration as well)  In addition, Section 311 of the Frank LoBiondo Coast Guard Authorization Act of 2018 ( S  140 / P L  115-282 of December 4, 2018) provides permanent authority for the Coast Guard to use block buy contracting with EOQ purchases of components in its major acquisition programs  The authority is now codified at 14 U S C  1137  As discussed earlier in this report, the Navy in recent years has made extensive use of MYP and BBC in its ship and aircraft acquisition programs, reducing the collective costs of those programs, the Navy estimates, by billions of dollars  The Coast Guard, like the Navy, procures ships and aircraft  In contrast to the Navy, however, the Coast Guard has never used MYP or BBC in its ship or aircraft acquisition programs  Instead, the Coast has tended to use contracts with options  As discussed earlier, although a contract with options looks like a multiyear contract, it operates more like a series of annual contracts, and it cannot achieve the kinds of savings that are possible under MYP and BBC  CRS in recent years has testified and reported on the possibility of using BBC or MYP in Coast Guard ship acquisition programs, particularly the Coast Guard's 25-ship Offshore Patrol Cutter (OPC) program and the Coast Guard's three-ship polar icebreaker program  CRS estimates that using multiyear contracting rather than contracts with options for the entire 25-ship OPC program could reduce the cost of the OPC program by about $1 billion  The OPC program is the Coast Guard's top-priority acquisition program, and it represents a once-in-a-generation opportunity to reduce the acquisition cost of a Coast Guard acquisition program by an estimated $1 billion  CRS also estimates that using BBC for a three-ship polar icebreaker program could reduce the cost of that program by upwards of $150 million  The Coast Guard has expressed some interest in using BBC in the polar icebreaker program, but its baseline acquisition strategy for that program, like its current acquisition strategy for the OPC program, is to use a contract with options  As part of its FY2020 budget submission, the Department of Defense is proposing continued funding for implementing several MYP contracts initiated in fiscal years prior to FY2020, but it has not highlighted any requests for authority for new MYP or block buy contracts for major acquisition programs that would begin in FY2020  Appendix A  Text of 10 U S C  2306b The text of 10 U S C  2306b as of April 29, 2019, is as follows: §2306b  Multiyear contracts: acquisition of property (a) In General -To the extent that funds are otherwise available for obligation, the head of an agency may enter into multiyear contracts for the purchase of property whenever the head of that agency finds each of the following: (1) That the use of such a contract will result in significant savings of the total anticipated costs of carrying out the program through annual contracts  (2) That the minimum need for the property to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities  (3) That there is a reasonable expectation that throughout the contemplated contract period the head of the agency will request funding for the contract at the level required to avoid contract cancellation  (4) That there is a stable design for the property to be acquired and that the technical risks associated with such property are not excessive  (5) That the estimates of both the cost of the contract and the anticipated cost avoidance through the use of a multiyear contract are realistic  (6) In the case of a purchase by the Department of Defense, that the use of such a contract will promote the national security of the United States  (7) In the case of a contract in an amount equal to or greater than $500,000,000, that the conditions required by subparagraphs (C) through (F) of subsection (i)(3) will be met, in accordance with the Secretary's certification and determination under such subsection, by such contract  (b) Regulations -(1) Each official named in paragraph (2) shall prescribe acquisition regulations for the agency or agencies under the jurisdiction of such official to promote the use of multiyear contracting as authorized by subsection (a) in a manner that will allow the most efficient use of multiyear contracting  (2)(A) The Secretary of Defense shall prescribe the regulations applicable to the Department of Defense  (B) The Secretary of Homeland Security shall prescribe the regulations applicable to the Coast Guard, except that the regulations prescribed by the Secretary of Defense shall apply to the Coast Guard when it is operating as a service in the Navy  (C) The Administrator of the National Aeronautics and Space Administration shall prescribe the regulations applicable to the National Aeronautics and Space Administration  (c) Contract Cancellations -The regulations may provide for cancellation provisions in multiyear contracts to the extent that such provisions are necessary and in the best interests of the United States  The cancellation provisions may include consideration of both recurring and nonrecurring costs of the contractor associated with the production of the items to be delivered under the contract  (d) Participation by Subcontractors, Vendors, and Suppliers -In order to broaden the defense industrial base, the regulations shall provide that, to the extent practicable- (1) multiyear contracting under subsection (a) shall be used in such a manner as to seek, retain, and promote the use under such contracts of companies that are subcontractors, vendors, or suppliers; and (2) upon accrual of any payment or other benefit under such a multiyear contract to any subcontractor, vendor, or supplier company participating in such contract, such payment or benefit shall be delivered to such company in the most expeditious manner practicable  (e) Protection of Existing Authority -The regulations shall provide that, to the extent practicable, the administration of this section, and of the regulations prescribed under this section, shall not be carried out in a manner to preclude or curtail the existing ability of an agency- (1) to provide for competition in the production of items to be delivered under such a contract; or (2) to provide for termination of a prime contract the performance of which is deficient with respect to cost, quality, or schedule  (f) Cancellation or Termination for Insufficient Funding -In the event funds are not made available for the continuation of a contract made under this section into a subsequent fiscal year, the contract shall be canceled or terminated  The costs of cancellation or termination may be paid from- (1) appropriations originally available for the performance of the contract concerned; (2) appropriations currently available for procurement of the type of property concerned, and not otherwise obligated; or (3) funds appropriated for those payments  (g) Contract Cancellation Ceilings Exceeding $100,000,000 -(1) Before any contract described in subsection (a) that contains a clause setting forth a cancellation ceiling in excess of $100,000,000 may be awarded, the head of the agency concerned shall give written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the congressional defense committees, and such contract may not then be awarded until the end of a period of 30 days beginning on the date of such notification  (2) In the case of a contract described in subsection (a) with a cancellation ceiling described in paragraph (1), if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract, the head of the agency concerned shall, as part of the certification required by subsection (i)(1)(A),1 give written notification to the congressional defense committees of- (A) the cancellation ceiling amounts planned for each program year in the proposed multiyear procurement contract, together with the reasons for the amounts planned; (B) the extent to which costs of contract cancellation are not included in the budget for the contract; and (C) a financial risk assessment of not including budgeting for costs of contract cancellation  (h) Defense Acquisitions of Weapon Systems -In the case of the Department of Defense, the authority under subsection (a) includes authority to enter into the following multiyear contracts in accordance with this section: (1) A multiyear contract for the purchase of a weapon system, items and services associated with a weapon system, and logistics support for a weapon system  (2) A multiyear contract for advance procurement of components, parts, and materials necessary to the manufacture of a weapon system, including a multiyear contract for such advance procurement that is entered into in order to achieve economic-lot purchases and more efficient production rates  (i) Defense Acquisitions Specifically Authorized by Law -(1) In the case of the Department of Defense, a multiyear contract in an amount equal to or greater than $500,000,000 may not be entered into under this section unless the contract is specifically authorized by law in an Act other than an appropriations Act  (2) In submitting a request for a specific authorization by law to carry out a defense acquisition program using multiyear contract authority under this section, the Secretary of Defense shall include in the request the following: (A) A report containing preliminary findings of the agency head required in paragraphs (1) through (6) of subsection (a), together with the basis for such findings  (B) Confirmation that the preliminary findings of the agency head under subparagraph (A) were supported by a preliminary cost analysis performed by the Director of Cost Assessment and Program Evaluation  (3) A multiyear contract may not be entered into under this section for a defense acquisition program that has been specifically authorized by law to be carried out using multiyear contract authority unless the Secretary of Defense certifies in writing, not later than 30 days before entry into the contract, that each of the following conditions is satisfied: (A) The Secretary has determined that each of the requirements in paragraphs (1) through (6) of subsection (a) will be met by such contract and has provided the basis for such determination to the congressional defense committees  (B) The Secretary's determination under subparagraph (A) was made after completion of a cost analysis conducted on the basis of section 2334(e)(2) 1 of this title, and the analysis supports the determination  (C) The system being acquired pursuant to such contract has not been determined to have experienced cost growth in excess of the critical cost growth threshold pursuant to section 2433(d) of this title within 5 years prior to the date the Secretary anticipates such contract (or a contract for advance procurement entered into consistent with the authorization for such contract) will be awarded  (D) A sufficient number of end items of the system being acquired under such contract have been delivered at or within the most current estimates of the program acquisition unit cost or procurement unit cost for such system to determine that current estimates of such unit costs are realistic  (E) During the fiscal year in which such contract is to be awarded, sufficient funds will be available to perform the contract in such fiscal year, and the future-years defense program for such fiscal year will include the funding required to execute the program without cancellation  (F) The contract is a fixed price type contract  (G) The proposed multiyear contract provides for production at not less than minimum economic rates given the existing tooling and facilities  (4) If for any fiscal year a multiyear contract to be entered into under this section is authorized by law for a particular procurement program and that authorization is subject to certain conditions established by law (including a condition as to cost savings to be achieved under the multiyear contract in comparison to specified other contracts) and if it appears (after negotiations with contractors) that such savings cannot be achieved, but that significant savings could nevertheless be achieved through the use of a multiyear contract rather than specified other contracts, the President may submit to Congress a request for relief from the specified cost savings that must be achieved through multiyear contracting for that program  Any such request by the President shall include details about the request for a multiyear contract, including details about the negotiated contract terms and conditions  (5)(A) The Secretary may obligate funds for procurement of an end item under a multiyear contract for the purchase of property only for procurement of a complete and usable end item  (B) The Secretary may obligate funds appropriated for any fiscal year for advance procurement under a contract for the purchase of property only for the procurement of those long-lead items necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law)  (6) The Secretary may make the certification under paragraph (3) notwithstanding the fact that one or more of the conditions of such certification are not met, if the Secretary determines that, due to exceptional circumstances, proceeding with a multiyear contract under this section is in the best interest of the Department of Defense and the Secretary provides the basis for such determination with the certification  (7) The Secretary may not delegate the authority to make the certification under paragraph (3) or the determination under paragraph (6) to an official below the level of Under Secretary of Defense for Acquisition, Technology, and Logistics  (j) Defense Contract Options for Varying Quantities -The Secretary of Defense may instruct the Secretary of the military department concerned to incorporate into a proposed multiyear contract negotiated priced options for varying the quantities of end items to be procured over the period of the contract  (k) Multiyear Contract Defined -For the purposes of this section, a multiyear contract is a contract for the purchase of property for more than one, but not more than five, program years  Such a contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds and (if it does so provide) may provide for a cancellation payment to be made to the contractor if such appropriations are not made  (l) Various Additional Requirements With Respect to Multiyear Defense Contracts -(1)(A) The head of an agency may not initiate a contract described in subparagraph (B) unless the congressional defense committees are notified of the proposed contract at least 30 days in advance of the award of the proposed contract  (B) Subparagraph (A) applies to the following contracts: (i) A multiyear contract- (I) that employs economic order quantity procurement in excess of $20,000,000 in any one year of the contract; or (II) that includes an unfunded contingent liability in excess of $20,000,000  (ii) Any contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20,000,000 in any one year  (2) The head of an agency may not initiate a multiyear contract for which the economic order quantity advance procurement is not funded at least to the limits of the Government's liability  (3) The head of an agency may not initiate a multiyear procurement contract for any system (or component thereof) if the value of the multiyear contract would exceed $500,000,000 unless authority for the contract is specifically provided in an appropriations Act  (4) Each report required by paragraph (5) with respect to a contract (or contract extension) shall contain the following: (A) The amount of total obligational authority under the contract (or contract extension) and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (B) The amount of total obligational authority under all multiyear procurements of the agency concerned (determined without regard to the amount of the multiyear contract (or contract extension)) under multiyear contracts in effect at the time the report is submitted and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (C) The amount equal to the sum of the amounts under subparagraphs (A) and (B), and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (D) The amount of total obligational authority under all Department of Defense multiyear procurements (determined without regard to the amount of the multiyear contract (or contract extension)), including any multiyear contract (or contract extension) that has been authorized by the Congress but not yet entered into, and the percentage that such amount represents of the procurement accounts of the Department of Defense treated in the aggregate  (5) The head of an agency may not enter into a multiyear contract (or extend an existing multiyear contract), the value of which would exceed $500,000,000 (when entered into or when extended, as the case may be), until the Secretary of Defense submits to the congressional defense committees a report containing the information described in paragraph (4) with respect to the contract (or contract extension)  (6) The head of an agency may not terminate a multiyear procurement contract until 10 days after the date on which notice of the proposed termination is provided to the congressional defense committees  (7) The execution of multiyear contracting authority shall require the use of a present value analysis to determine lowest cost compared to an annual procurement  (8) This subsection does not apply to the National Aeronautics and Space Administration or to the Coast Guard  (9) In this subsection: (A) The term "applicable procurement account" means, with respect to a multiyear procurement contract (or contract extension), the appropriation account from which payments to execute the contract will be made  (B) The term "agency procurement total" means the procurement accounts of the agency entering into a multiyear procurement contract (or contract extension) treated in the aggregate  (m) Increased Funding and Reprogramming Requests -Any request for increased funding for the procurement of a major system under a multiyear contract authorized under this section shall be accompanied by an explanation of how the request for increased funding affects the determinations made by the Secretary under subsection (i)  Appendix B  Programs Approved for MYP in Annual DOD Appropriations Acts Since FY1990 This appendix presents, in two tables, programs approved for MYP in annual DOD appropriations acts since FY1990  Table B-1 covers FY2011 to the present, and Table B-2 covers FY1990 through FY2010 


Report 2:  In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate  As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate  FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties  However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed  Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology  First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties  Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss  Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988  Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases  Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used  Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented  In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas  Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch  In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent  This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates  However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low  Agency officials told us that they had not addressed this weakness because of other priorities  Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information  In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities  As a result, our recommendation remains open  FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest  FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount  Agency officials said that they plan to do such consultations through COMSTAC  However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed  As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain  This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected  Because of this potential exposure, we maintain that addressing this weakness is a priority  As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties  FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios  The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle  According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive  The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool  According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations  In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations  Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates  For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties  We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage  For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex  Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large  In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties  While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches  The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations  As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety  Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives  For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system  Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources  Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources  We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade  FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012  FAA’s MPL methodology is critical in balancing the encouragement of the U S  commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents  However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness  In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs  Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA  FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions  However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority  FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete  For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988  While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open  Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed  These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government  We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds  (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government  (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government  (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch  (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment  In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations  The Department of Transportation also provided technical comments, which we incorporated as appropriate  We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation  In addition, this report will be available at no charge on GAO’s website at http://www gao gov  If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Individuals making key contributions to this report are listed in appendix II  In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report 

ground_truth: The federal government shares liability risks with the commercial space launch industry for accidents that result in damages to third parties or federal property. This arrangement requires space launch companies to have a specific amount of insurance to cover these damages. The government is potentially liable for damages above that amount, up to a cap GAO estimated to be $3.1 billion in 2017, subject to appropriations in advance. CSLCA, enacted in 2015, directed the Department of Transportation, of which FAA is a part, to evaluate its MPL methodology and, if necessary, develop a plan to update that methodology. The act also included a provision requiring GAO to assess FAA's evaluation and any actions needed to update the methodology. This report discusses the extent to which (1) FAA's evaluation report addresses the requirements in CSLCA and (2) FAA has addressed previously identified weaknesses in the MPL methodology. GAO reviewed documents and interviewed FAA on its loss methodology evaluation and actions to address weaknesses. The Federal Aviation Administration's (FAA) report evaluating its maximum probable loss (MPL) methodology did not fully address the evaluation and consultation requirements specified by the U.S. Commercial Space Launch Competitiveness Act (CSLCA). Balance of Risk. CSLCA required FAA to include ensuring that the federal government is not exposed to greater indemnification costs and that launch companies are not required to purchase more insurance coverage than necessary as a result of FAA's MPL methodology. FAA said that it ensured this balance by improving its methodology, but it did not reevaluate its probability thresholds after revising its methodology. These thresholds are used to divide the risk of loss between launch companies and the government. Impact on Costs. The act required FAA to consider the costs to both the industry and the federal government of implementing an updated methodology. FAA's report discussed the impact on indirect costs, such as data collection, but did not discuss direct costs: insurance premiums for launch companies and indemnification liability for the federal government. Consultation. The act also required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology in accordance with the preceding requirements. While the agency consulted with some stakeholders, these consultations were limited in scope. FAA officials said they have not been able to take the actions needed to fully satisfy the mandated elements because of issues such as resource limitations and the lack of available data. However, by not resolving these issues, FAA lacks assurance that launch companies are not purchasing more insurance than needed or that the federal government is not being exposed to greater indemnification costs than expected. FAA has addressed two of three previously identified weaknesses in its MPL methodology but has not yet dealt with the remaining weakness. Specifically, the agency has revised its methodology for estimating the number of potential casualties for a launch and changed the factor it uses to derive estimated property damage from estimated casualties. However, FAA has not updated the amount used for the cost of an individual casualty. GAO recommended in a March 2017 report (GAO-17-366) that FAA update this amount. Not doing so could understate the amount of insurance launch companies are required to purchase, exposing the federal government to excess risk. GAO also determined that while FAA has two tools and methods it can use in making its MPL estimates, it does not have guidance on determining which are most appropriate for a given launch scenario. For example, one tool is more comprehensive but also labor intensive to use, while the other is inappropriate for certain launch scenarios and could result in misleading MPL amounts. Officials said they have begun to create such guidance but do not have an estimated completion date. Without such guidance, FAA cannot ensure that the most appropriate MPL methodology is used for each launch. FAA should fully address mandated requirements in evaluating its MPL—probability thresholds, direct costs, and stakeholder consultations— and establish an estimated completion date for developing guidance on tools and methods to use for specific launch scenarios. The Department of Transportation concurred with the recommendations, and provided technical comments.