(2) OTHER VESSELS.—The Commandant shall 
cause the design and construction of each National 
Security Cutter, other than National Security Cutters 
1, 2, and 3, to be assessed by an independent third 
party with expertise in vessel design and construction 
certification. 
(d) AIRCRAFT AIRWORTHINESS.—The Commandant 
shall cause all aircraft and aircraft engines acquired by the 
Coast Guard and delivered after the date of enactment of 
this Act to be assessed for airworthiness by an independent 
third party with expertise in aircraft and aircraft engine 
certification, before final acceptance. 
SEC. 526. ACQUISITION PROGRAM REPORTS. 
Any Coast Guard Level 1 or Level 2 acquisition pro-
gram or project may not begin to obtain any capability 
or asset or proceed beyond that phase of its development 
that entails approving the supporting acquisition until the 
Commandant submits to the appropriate congressional 
committees the following: 
(1) The key performance parameters, the key sys-
tem attributes, and the operational performance at-
tributes of the capability and asset to be acquired 
under the proposed acquisition program or project 
will be built to achieve. 
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(2) A detailed list of the systems or other capa-
bilities with which the capability or asset to be ac-
quired is intended to be interoperable, including an 
explanation of the attributes of interoperability. 
(3) The anticipated acquisition program baseline 
and acquisition unit cost for the capability or asset 
to be produced and deployed under the program or 
project. 
(4) A detailed schedule for the acquisition process 
showing when all capability and asset acquisitions 
are to be completed and when all acquired capabili-
ties and assets are to be initially and fully deployed. 
SEC. 527. UNDEFINITIZED CONTRACTUAL ACTIONS. 
(a) IN GENERAL.—The Coast Guard may not enter 
into an undefinitized contractual action unless such action 
is directly approved by the Head of Contracting Activity 
of the Coast Guard. 
(b) REQUESTS
FOR UNDEFINITIZED CONTRACTUAL 
ACTIONS.—Any request to the Head of Contracting Activity 
for approval of an undefinitized contractual action covered 
under subsection (a) must include a description of the an-
ticipated effect on requirements of the Coast Guard if a 
delay is incurred for the purposes of determining contrac-
tual terms, specifications, and price before performance is 
begun under the contractual action. 
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(c) REQUIREMENTS FOR UNDEFINITIZED CONTRAC-
TUAL ACTIONS.— 
(1) DEADLINE
FOR
AGREEMENT
ON
TERMS, 
SPECIFICATIONS, AND PRICE.—A contracting officer of 
the Coast Guard may not enter into an undefinitized 
contractual action unless the contractual action pro-
vides for agreement upon contractual terms, specifica-
tion, and price by the earlier of— 
(A) the end of the 180-day period beginning 
on the date on which the contractor submits a 
qualifying proposal to definitize the contractual 
terms, specifications, and price; or 
(B) the date on which the amount of funds 
obligated under the contractual action is equal to 
more than 50 percent of the negotiated overall 
ceiling price for the contractual action. 
(2) LIMITATION ON OBLIGATIONS.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the contracting officer for an 
undefinitized contractual action may not obli-
gate under such contractual action an amount 
that exceeds 50 percent of the negotiated overall 
ceiling price until the contractual terms, speci-
fications, and price are definitized for such con-
tractual action. 
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(B) 
EXCEPTION.—Notwithstanding 
sub-
paragraph (A), if a contractor submits a quali-
fying proposal to definitize an undefinitized con-
tractual action before an amount that exceeds 50 
percent of the negotiated overall ceiling price is 
obligated on such action, the contracting officer 
for such action may not obligate with respect to 
such contractual action an amount that exceeds 
75 percent of the negotiated overall ceiling price 
until the contractual terms, specifications, and 
price are definitized for such contractual action. 
(3) WAIVER.—The Commandant may waive the 
application of this subsection with respect to a con-
tract if the Commandant determines that the waiver 
is necessary to support— 
(A) a contingency operation (as that term 
is defined in section 101(a)(13) of title 10, 
United States Code); 
(B) an operation in response to an emer-
gency that poses an unacceptable threat to 
human health or safety or to the marine environ-
ment; or 
(C) an operation in response to a natural 
disaster or major disaster or emergency des-
ignated by the President under the Robert T. 
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Stafford Disaster Relief and Emergency Assist-
ance Act (42 U.S.C. 5121 et seq.). 
(4) LIMITATION
ON
APPLICATION.—This sub-
section does not apply to an undefinitized contractual 
action for the purchase of initial spares. 
(d) INCLUSION OF NONURGENT REQUIREMENTS.—Re-
quirements for spare parts and support equipment that are 
not needed on an urgent basis may not be included in an 
undefinitized contractual action by the Coast Guard for 
spare parts and support equipment that are needed on an 
urgent basis unless the Commandant approves such inclu-
sion as being— 
(1) good business practice; and 
(2) in the best interests of the United States. 
(e) MODIFICATION
OF
SCOPE.—The scope of an 
undefinitized contractual action under which performance 
has begun may not be modified unless the Commandant ap-
proves such modification as being— 
(1) good business practice; and 
(2) in the best interests of the United States. 
(f) ALLOWABLE PROFIT.—The Commandant shall en-
sure that the profit allowed on an undefinitized contractual 
action for which the final price is negotiated after a sub-
stantial portion of the performance required is completed 
reflects— 
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(1) the possible reduced cost risk of the contractor 
with respect to costs incurred during performance of 
the contract before the final price is negotiated; and 
(2) the reduced cost risk of the contractor with 
respect to costs incurred during performance of the re-
maining portion of the contract. 
(g) DEFINITIONS.—In this section: 
(1) UNDEFINITIZED CONTRACTUAL ACTION.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘‘undefinitized con-
tractual action’’ means a new procurement ac-
tion entered into by the Coast Guard for which 
the contractual terms, specifications, or price are 
not agreed upon before performance is begun 
under the action. 
(B) EXCLUSION.—Such term does not in-
clude contractual actions with respect to the fol-
lowing: 
(i) Foreign military sales. 
(ii) Purchases in an amount not in ex-
cess of the amount of the simplified acquisi-
tion threshold. 
(iii) Special access programs. 
(2) QUALIFYING PROPOSAL.—The term ‘‘quali-
fying proposal’’ means a proposal that contains suffi-
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cient information to enable complete and meaningful 
audits of the information contained in the proposal as 
determined by the contracting officer. 
SEC. 
528. 
GUIDANCE 
ON 
EXCESSIVE 
PASS-THROUGH 
CHARGES. 
(a) IN GENERAL.—Not later than 180 days after the 
date of enactment of this Act, the Commandant shall issue 
guidance to ensure that pass-through charges on contracts, 
subcontracts, delivery orders, and task orders that are en-
tered into with a private entity acting as a lead systems 
integrator by or on behalf of the Coast Guard are not exces-
sive in relation to the cost of work performed by the relevant 
contractor or subcontractor. The guidance shall, at a min-
imum— 
(1) set forth clear standards for determining 
when no, or negligible, value has been added to a con-
tract by a contractor or subcontractor; 
(2) set forth procedures for preventing the pay-
ment by the Government of excessive pass-through 
charges; and 
(3) identify any exceptions determined by the 
Commandant to be in the best interest of the Govern-
ment. 
(b) EXCESSIVE PASS-THROUGH CHARGE DEFINED.— 
In this section the term ‘‘excessive pass-through charge’’, 
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with respect to a contractor or subcontractor that adds no, 
or negligible, value to a contract or subcontract, means a 
charge to the Government by the contractor or subcontractor 
that is for overhead or profit on work performed by a lower- 
tier contractor or subcontractor, other than reasonable 
charges for the direct costs of managing lower-tier contrac-
tors and subcontracts and overhead and profit based on 
such direct costs. 
(c) APPLICATION OF GUIDANCE.—The guidance under 
this subsection shall apply to contracts awarded to a pri-
vate entity acting as a lead systems integrator by or on 
behalf of the Coast Guard on or after the date that is 360 
days after the date of enactment of this Act. 
SEC. 529. ACQUISITION OF MAJOR CAPABILITIES: ALTER-
NATIVES ANALYSIS. 
The Coast Guard may not acquire an experimental or 
technically immature capability or asset or implement a 
Level 1 or Level 2 acquisition, unless it has conducted an 
alternatives analysis for the capability or asset to be ac-
quired in the concept and technology development phase of 
the acquisition process for the capability or asset. Such 
analysis shall be conducted by a federally funded research 
and development center, a qualified entity of the Depart-
ment of Defense, or a similar independent third party enti-
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ty that has appropriate acquisition expertise. Such alter-
natives analysis shall include— 
(1) an assessment of the technical maturity of 
the capability or asset and technical and other risks; 
(2) an examination of capability, interoper-
ability, and other advantages and disadvantages; 
(3) an evaluation of whether different combina-
tions or quantities of specific capabilities or assets 
could meet the Coast Guard’s overall performance 
needs; 
(4) a discussion of key assumptions and vari-
ables, and sensitivity to change in such assumptions 
and variables; 
(5) when an alternative is an existing capa-
bility, asset, or prototype, an evaluation of relevant 
safety and performance records and costs; 
(6) a calculation of life-cycle costs, including— 
(A) an examination of development costs 
and the levels of uncertainty associated with 
such estimated costs; 
(B) an examination of likely production 
and deployment costs and the levels of uncer-
tainty associated with such estimated costs; 
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(C) an examination of likely operating and 
support costs and the levels of uncertainty asso-
ciated with such estimated costs; 
(D) if they are likely to be significant, an 
examination of likely disposal costs and the lev-
els of uncertainty associated with such estimated 
costs; and 
(E) such additional measures the Com-
mandant determines to be necessary for appro-
priate evaluation of the capability or asset; and 
(7) the business case for each viable alternative. 
SEC. 530. COST OVERRUNS AND DELAYS. 
(a) IN GENERAL.—The Commandant shall submit a 
report to the appropriate congressional committees as soon 
as possible, but not later than 30 days, after the Chief Ac-
quisition Officer of the Coast Guard becomes aware of the 
breach of an acquisition program baseline for any Level 1 
or Level 2 acquisition program, by— 
(1) a likely cost overrun greater than 10 percent 
of the acquisition program baseline for that indi-
vidual capability or asset or a class of capabilities or 
assets; 
(2) a likely delay of more than 180 days in the 
delivery schedule for any individual capability or 
asset or class of capabilities or assets; or 
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(3) an anticipated failure for any individual ca-
pability or asset or class of capabilities or assets to 
satisfy any key performance threshold or parameter 
under the acquisition program baseline. 
(b) CONTENT.—The report submitted under subsection 
(a) shall include— 
(1) a detailed description of the breach and an 
explanation of its cause; 
(2) the projected impact to performance, cost, 
and schedule; 
(3) an updated acquisition program baseline and 
the complete history of changes to the original acqui-
sition program baseline; 
(4) the updated acquisition schedule and the 
complete history of changes to the original schedule; 
(5) a full life-cycle cost analysis for the capa-
bility or asset or class of capabilities or assets; 
(6) a remediation plan identifying corrective ac-
tions and any resulting issues or risks; and 
(7) a description of how progress in the remedi-
ation plan will be measured and monitored. 
(c) SUBSTANTIAL VARIANCES IN COSTS OR SCHED-
ULE.—If a likely cost overrun is greater than 20 percent 
or a likely delay is greater than 12 months from the costs 
and schedule described in the acquisition program baseline 
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