H. R. 5122—40
as the acquisition program with respect to which the breach 
occurred.’’. 
(3) ACTION UPON UNFAVORABLE FULL REVIEW AND EVALUA-
TION.—Section 2359b of such title is amended—
(A) by redesignating subsections (f), (g), (h), (i), and 
(j) as subsections (g), (h), (i), (j), and (k) respectively; and 
(B) by inserting after subsection (e) the following new 
subsection (f): 
‘‘(f) ACTION UPON UNFAVORABLE FULL REVIEW AND EVALUA-
TION.—Under procedures prescribed by the Under Secretary, if a 
challenge proposal is determined by a Panel to satisfy each of 
the criteria specified in subsection (c)(5), but is not determined 
under a full review and evaluation to satisfy such criteria, the 
following provisions apply: 
‘‘(1) The office carrying out the full review and evaluation 
shall provide to the Panel that conducted the preliminary 
evaluation a statement containing a summary of the rationale 
for the unfavorable evaluation. 
‘‘(2) If the Panel disagrees with the rationale provided 
under paragraph (1), the Panel may return the challenge pro-
posal to the office for further consideration.’’. 
(4) ADDITIONAL INFORMATION REQUIRED TO BE INCLUDED 
IN ANNUAL REPORT.—Section 2359b(j) of such title, as redesig-
nated by paragraph (3), is amended by striking ‘‘No report 
is required for a fiscal year in which the Challenge Program 
is not carried out.’’ and inserting ‘‘The report shall also include 
a list of each challenge proposal that was determined by a 
Panel to satisfy each of the criteria specified in subsection 
(c)(5), but was not determined under a full review and evalua-
tion to satisfy such criteria, together with a detailed rationale 
for the Department’s determination that such criteria were 
not satisfied.’’. 
(c) EVALUATION AND REPORT REQUIRED.—The Under Secretary 
of Defense for Acquisition, Technology, and Logistics, in coordination 
with the service acquisition executives, shall—
(1) evaluate the efficacy of the incentives provided to 
encourage the adoption of each challenge proposal receiving 
favorable full review and evaluation, as required by section 
2359b(e)(2) of title 10, United States Code; 
(2) identify additional incentives and authorities required, 
if any, to further facilitate the adoption of each challenge pro-
posal receiving favorable full review and evaluation, particu-
larly in the case of challenge proposals submitted in response 
to critical cost growth threshold breaches (as such term is 
used in section 2359b of such title); and 
(3) not later than March 1, 2007, submit to the Committees 
on Armed Services of the Senate and the House of Representa-
tives a report setting forth the results of such evaluation and 
identification. 
(d) PRIORITY
FOR PROPOSALS FROM CERTAIN BUSINESSES.—
Paragraph (6) of section 2359b(c) of such title, as redesignated 
by paragraph (b)(1)(A), is amended to read as follows: 
‘‘(6) The Under Secretary—
‘‘(A) may establish procedures to ensure that the Challenge 
Program does not become an avenue for the repetitive submis-
sion of proposals that have been previously reviewed and found 
not to have merit; and
H. R. 5122—41
‘‘(B) may establish procedures to ensure that the Challenge 
Program establishes appropriate priorities for proposals from 
businesses that are not major contractors with the Department 
of Defense.’’. 
(e) CONFIDENTIALITY.—Subsection (h) of section 2359b of such 
title, as redesignated by subsection (b)(3), is amended—
(1) by amending the heading to read as follows: ‘‘CONFLICTS 
OF INTEREST AND CONFIDENTIALITY’’; and 
(2) by striking the period at the end and inserting the 
following: ‘‘and that the identity of any person or activity 
submitting a challenge proposal is not disclosed outside the 
Federal Government, prior to contract award, without the con-
sent of the person or activity. For purposes of the proceeding 
sentence, the term ‘Federal Government’ includes both 
employees of the Federal Government and employees of Federal 
Government contractors providing advisory and assistance serv-
ices as described in part 37 of the Federal Acquisition Regula-
tion.’’. 
(f) EXTENSION.—Subsection (k) of section 2359b of title 10, 
United States Code, as redesignated by subsection (b)(3), is amended 
by striking ‘‘September 30, 2007’’ and inserting ‘‘September 30, 
2012’’. 
(g) ADDITIONAL CONFORMING AMENDMENTS.—Section 2359b of 
such title is further amended—
(1) in subsection (c)(7), as redesignated by subsection (b), 
by striking ‘‘paragraph (4)’’ and inserting ‘‘paragraph (5)’’; 
(2) in subsection (d)(1), by striking ‘‘subsection (c)(6)’’ and 
inserting ‘‘subsection (c)(7)’’; 
(3) in subsection (d)(2), by striking ‘‘subsection (c)(4)’’ and 
inserting ‘‘subsection (c)(5)’’; and 
(4) in subsection (e)(1), by striking ‘‘subsection (c)(4)’’ and 
inserting ‘‘subsection (c)(5)’’. 
SEC. 214. FUTURE COMBAT SYSTEMS MILESTONE REVIEW. 
(a) MILESTONE REVIEW REQUIRED.—Not later than 120 days 
after the preliminary design review of the Future Combat Systems 
program is completed, the Secretary of Defense shall carry out 
a Defense Acquisition Board milestone review of the Future Combat 
Systems program. The milestone review shall include an assessment 
as to each of the following: 
(1) Whether the warfighter’s needs are valid and can be 
best met with the concept of the program. 
(2) Whether the concept of the program can be developed 
and produced within existing resources. 
(3) Whether the program should—
(A) continue as currently structured; 
(B) continue in restructured form; or 
(C) be terminated. 
(b) DETERMINATIONS TO BE MADE IN ASSESSING WHETHER PRO-
GRAM SHOULD CONTINUE.—In making the assessment required by 
subsection (a)(3), the Secretary shall make a determination with 
respect to each of the following: 
(1) Whether each critical technology for the program is 
at least Technical Readiness Level 6. 
(2) For each system and network component of the program, 
what the key design and technology risks are, based on System
H. R. 5122—42
Functional Reviews, Preliminary Design Reviews, and Tech-
nical Readiness Levels. 
(3) Whether actual demonstrations, rather than simula-
tions, have shown that the concept of the program will work. 
(4) Whether actual demonstrations, rather than plans, have 
shown that the software for the program is functional. 
(5) What the cost estimate for the program is. 
(6) What the affordability assessment for the program is, 
based on that cost estimate. 
(c) REPORT.—The Secretary shall submit to the congressional 
defense committees a report on the findings and conclusions of 
the milestone review required by subsection (a). The report shall 
include, and display, each of the assessments required by subsection 
(a) and each of the determinations required by subsection (b). 
(d) RESTRICTION ON PROCUREMENT FUNDS EFFECTIVE FISCAL 
2009.—
(1) IN
GENERAL.—For fiscal years beginning with 2009, 
the Secretary may not obligate any funds for procurement 
for the Future Combat Systems program. 
(2) EXCEPTIONS.—Paragraph (1) does not apply with respect 
to—
(A) the obligation of funds for costs attributable to 
an insertion of new technology (to include spinout systems) 
into the current force, if the insertion is approved by the 
Under Secretary of Defense for Acquisition, Technology, 
and Logistics; or 
(B) the obligation of funds for the non-line-of-sight 
cannon system. 
(3) TERMINATION.—The requirement of paragraph (1) termi-
nates after the report required by subsection (c) is submitted. 
SEC. 215. DEDICATED AMOUNTS FOR IMPLEMENTING OR EVALUATING 
NAVY SHIPBUILDING TECHNOLOGY PROPOSALS UNDER 
DEFENSE ACQUISITION CHALLENGE PROGRAM. 
(a) AMOUNTS REQUIRED.—Of the amounts appropriated pursu-
ant to the authorization of appropriations in section 201(4) for 
research, 
development, 
test, 
and 
evaluation, 
Defense-wide, 
$4,000,000 may be available to implement or evaluate challenge 
proposals specified in subsection (b). 
(b) CHALLENGE PROPOSALS COVERED.—A challenge proposal 
referred to in subsection (a) is a proposal under the Defense Acquisi-
tion Challenge Program established by section 2359b of title 10, 
United States Code, that relates to technology directly contributing 
to combat systems and open architecture design for Navy ship 
platforms. 
SEC. 216. INDEPENDENT ESTIMATE OF COSTS OF THE FUTURE COM-
BAT SYSTEMS. 
(a) INDEPENDENT ESTIMATE REQUIRED.—
(1) IN GENERAL.—The Secretary of Defense shall provide 
for the preparation of an independent estimate of the antici-
pated costs of systems development and demonstration with 
respect to the Future Combat Systems. 
(2) CONDUCT OF ESTIMATE.—The estimate required by this 
subsection shall be prepared by a federally funded research 
and development center selected by the Secretary for purposes 
of this subsection.
H. R. 5122—43
(3) MATTERS TO BE ADDRESSED.—The independent estimate 
prepared under this subsection shall address costs of research, 
development, test, and evaluation, and costs of procurement, 
for—
(A) the system development and demonstration phase 
of the core Future Combat Systems; 
(B) the Future Combat Systems technologies to be 
incorporated into the equipment of the current force of 
the Army (often referred to as ‘‘spinouts’’); 
(C) the installation kits for the incorporation of such 
technologies into such equipment; 
(D) the systems treated as complementary systems 
for the Future Combat Systems; 
(E) science and technology initiatives that support the 
Future Combat Systems program; and 
(F) any pass-through charges anticipated to be assessed 
by the lead systems integrator of the Future Combat Sys-
tems and its major subcontractors. 
(4) SUBMITTAL TO CONGRESS.—Upon completion of the inde-
pendent estimate required by this subsection, the Secretary 
shall submit to the congressional defense committees a report 
on the estimate. 
(5) DEADLINE
FOR
SUBMITTAL.—The report described in 
paragraph (4) shall be submitted not later than April 1, 2007. 
(b) PASS-THROUGH CHARGE DEFINED.—In this section, the term 
‘‘pass-through charge’’ has the meaning given that term in section 
805(c)(5) of the National Defense Authorization Act for Fiscal Year 
2006 (Public Law 109–163; 119 Stat. 3373). 
SEC. 217. FUNDING OF DEFENSE SCIENCE AND TECHNOLOGY PRO-
GRAMS. 
(a) FAILURE TO COMPLY WITH FUNDING OBJECTIVE.—Section 
212 of the National Defense Authorization Act for Fiscal Year 
2000 (10 U.S.C. 2501 note) is amended in subsection (a) by striking 
‘‘especially the Air Force Science and Technology Program,’’. 
(b) EXTENSION
OF
FUNDING
OBJECTIVE.—Such section is 
amended in subsection (b) by striking ‘‘through 2009’’ and inserting 
‘‘through 2012’’. 
(c) ACTIONS FOLLOWING FAILURE TO COMPLY WITH OBJEC-
TIVE.—Such section is further amended by adding at the end the 
following new subsection: 
‘‘(c) ACTIONS FOLLOWING FAILURE TO COMPLY WITH OBJEC-
TIVE.—If the proposed budget for a fiscal year covered by subsection 
(b) fails to comply with the objective set forth in that subsection, 
the Secretary of Defense shall submit to the congressional defense 
committees, at the same time that the Department of Defense 
budget justification materials for the next fiscal year are submitted 
to Congress—
‘‘(1) a detailed, prioritized list, including estimates of 
required funding, of highly-rated science and technology 
projects received by the Department through competitive solici-
tations and broad agency announcements which—
‘‘(A) are not funded solely due to lack of resources, 
but 
‘‘(B) represent science and technology opportunities 
that support the research and development programs and