H. R. 1735—171 
‘‘(A) competitive procedures were used for the selection 
of parties for participation in the transaction; and 
‘‘(B) the participants in the transaction successfully com-
pleted the prototype project provided for in the transaction. 
‘‘(3) Contracts and transactions entered into pursuant to this 
subsection may be awarded using the authority in subsection (a), 
under the authority of chapter 137 of this title, or under such 
procedures, terms, and conditions as the Secretary of Defense may 
establish by regulation. 
‘‘(g) AUTHORITY TO PROVIDE PROTOTYPES
AND FOLLOW-ON 
PRODUCTION ITEMS AS GOVERNMENT-FURNISHED EQUIPMENT.—An 
agreement entered into pursuant to the authority of subsection 
(a) or a follow-on contract or transaction entered into pursuant 
to the authority of subsection (f) may provide for prototypes or 
follow-on production items to be provided to another contractor 
as Government-furnished equipment. 
‘‘(h) APPLICABILITY OF PROCUREMENT ETHICS REQUIREMENTS.— 
An agreement entered into under the authority of this section 
shall be treated as a Federal agency procurement for the purposes 
of chapter 21 of title 41.’’. 
(2) CLERICAL AMENDMENT.—The table of sections at the 
beginning of chapter 139 of such title is amended by inserting 
after the item relating to section 2371a the following new 
item: 
‘‘2371b. Authority of the Department of Defense to carry out certain prototype 
projects.’’. 
(b) MODIFICATION TO DEFINITION OF NONTRADITIONAL DEFENSE 
CONTRACTOR.—Section 2302(9) of such title is amended to read 
as follows: 
‘‘(9) The term ‘nontraditional defense contractor’, with 
respect to a procurement or with respect to a transaction 
authorized under section 2371(a) or 2371b of this title, means 
an entity that is not currently performing and has not per-
formed, for at least the one-year period preceding the solicita-
tion of sources by the Department of Defense for the procure-
ment or transaction, any contract or subcontract for the Depart-
ment of Defense that is subject to full coverage under the 
cost accounting standards prescribed pursuant to section 1502 
of title 41 and the regulations implementing such section.’’. 
(c) REPEAL
OF OBSOLETE AUTHORITY.—Section 845 of the 
National Defense Authorization Act for Fiscal Year 1994 (Public 
Law 103–160; 10 U.S.C. 2371 note) is hereby repealed. Transactions 
entered into under the authority of such section 845 shall remain 
in force and effect and shall be modified as appropriate to reflect 
the amendments made by this section. 
(d) TECHNICAL AND CONFORMING AMENDMENT.—Subparagraph 
(B) of section 1601(c)(1) of the National Defense Authorization Act 
for Fiscal Year 2004 (Public Law 108–136; 10 U.S.C. 2358 note) 
is amended to read as follows: 
‘‘(B) sections 2371 and 2371b of title 10, United States 
Code.’’. 
(e) UPDATED GUIDANCE.—Not later than 180 days after the 
date of the enactment of this Act, the Secretary of Defense shall 
issue updated guidance to implement the amendments made by 
this section.
H. R. 1735—172 
(f) ASSESSMENT REQUIRED.—Not later than 180 days after the 
date of the enactment of this Act, the Secretary of Defense shall 
submit to the congressional defense committees an assessment of— 
(1) the benefits and risks of permitting not-for-profit 
defense contractors to be awarded transaction agreements 
under section 2371b of title 10, United States Code, for the 
purposes of cost-sharing requirements of subsection (d)(1)(C) 
of such section; and 
(2) the benefits and risks of removing the cost-sharing 
requirements of subsection (d)(1)(C) of such section in their 
entirety. 
SEC. 816. AMENDMENT TO ACQUISITION THRESHOLD FOR SPECIAL 
EMERGENCY PROCUREMENT AUTHORITY. 
Section 1903(b)(2) of title 41, United States Code, is amended— 
(1) in subparagraph (A), by striking ‘‘$250,000’’ and 
inserting ‘‘$750,000’’; and 
(2) in subparagraph (B), by striking ‘‘$1,000,000’’ and 
inserting ‘‘$1,500,000’’. 
SEC. 817. REVISION OF METHOD OF ROUNDING WHEN MAKING INFLA-
TION ADJUSTMENT OF ACQUISITION-RELATED DOLLAR 
THRESHOLDS. 
Section 1908(e)(2) of title 41, United States Code, is amended— 
(1) in the matter preceding subparagraph (A), by striking 
‘‘on the day before the adjustment’’ and inserting ‘‘as calculated 
under paragraph (1)’’; 
(2) by striking ‘‘and’’ at the end of subparagraph (C); and 
(3) by striking subparagraph (D) and inserting the following 
new subparagraphs: 
‘‘(D) 
not 
less 
than 
$1,000,000, 
but 
less 
than 
$10,000,000, to the nearest $500,000; 
‘‘(E) not less than $10,000,000, but less than 
$100,000,000, to the nearest $5,000,000; 
‘‘(F) not less than $100,000,000, but less than 
$1,000,000,000, to the nearest $50,000,000; and 
‘‘(G) 
$1,000,000,000 
or 
more, 
to 
the 
nearest 
$500,000,000.’’. 
Subtitle C—Provisions Related to Major 
Defense Acquisition Programs 
SEC. 821. ACQUISITION STRATEGY REQUIRED FOR EACH MAJOR 
DEFENSE ACQUISITION PROGRAM, MAJOR AUTOMATED 
INFORMATION SYSTEM, AND MAJOR SYSTEM. 
(a) CONSOLIDATION OF REQUIREMENTS RELATING TO ACQUISI-
TION STRATEGY.— 
(1) NEW TITLE 10 SECTION.—Chapter 144 of title 10, United 
States Code, is amended by inserting after section 2431 the 
following new section: 
‘‘§ 2431a. Acquisition strategy 
‘‘(a) ACQUISITION STRATEGY REQUIRED.—There shall be an 
acquisition strategy for each major defense acquisition program, 
each major automated information system, and each major system 
approved by a milestone decision authority.
H. R. 1735—173 
‘‘(b) RESPONSIBLE OFFICIAL.—For each acquisition strategy 
required by subsection (a), the Under Secretary of Defense for 
Acquisition, Technology, and Logistics is responsible for issuing 
and maintaining the requirements for— 
‘‘(1) the content of the strategy; and 
‘‘(2) the review and approval process for the strategy. 
‘‘(c) CONSIDERATIONS.—(1) In issuing requirements for the con-
tent of an acquisition strategy for a major defense acquisition pro-
gram, major automated information system, or major system, the 
Under Secretary shall ensure that— 
‘‘(A) the strategy clearly describes the proposed top-level 
business and technical management approach for the program 
or system, in sufficient detail to allow the milestone decision 
authority to assess the viability of the proposed approach, the 
method of implementing laws and policies, and program objec-
tives; 
‘‘(B) the strategy contains a clear explanation of how the 
strategy is designed to be implemented with available 
resources, such as time, funding, and management capacity; 
‘‘(C) the strategy is tailored to address program require-
ments and constraints; and 
‘‘(D) the strategy considers the items listed in paragraph 
(2). 
‘‘(2) Each strategy shall, where appropriate, consider the fol-
lowing: 
‘‘(A) An approach that delivers required capability in incre-
ments, each depending on available mature technology, and 
that recognizes up front the need for future capability improve-
ments. 
‘‘(B) Acquisition approach, including industrial base consid-
erations in accordance with section 2440 of this title. 
‘‘(C) Risk management, including such methods as competi-
tive prototyping at the system, subsystem, or component level, 
in accordance with section 2431b of this title. 
‘‘(D) Business strategy, including measures to ensure com-
petition at the system and subsystem level throughout the 
life-cycle of the program or system in accordance with section 
2337 of this title. 
‘‘(E) Contracting strategy, including— 
‘‘(i) contract type and how the type selected relates 
to level of program risk in each acquisition phase; 
‘‘(ii) how the plans for the program or system to reduce 
risk enable the use of fixed-price elements in subsequent 
contracts and the timing of the use of those fixed price 
elements; 
‘‘(iii) market research; and 
‘‘(iv) consideration of small business participation. 
‘‘(F) Intellectual property strategy in accordance with sec-
tion 2320 of this title. 
‘‘(G) International involvement, including foreign military 
sales and cooperative opportunities, in accordance with section 
2350a of this title. 
‘‘(H) Multiyear procurement in accordance with section 
2306b of this title. 
‘‘(I) Integration of current intelligence assessments into 
the acquisition process.
H. R. 1735—174 
‘‘(J) Requirements related to logistics, maintenance, and 
sustainment in accordance with sections 2464 and 2466 of 
this title. 
‘‘(d) REVIEW.—(1) Subject to the authority, direction, and control 
of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics, the milestone decision authority shall review and 
approve, as appropriate, the acquisition strategy for a major defense 
acquisition program, major automated information system, or major 
system at each of the following times: 
‘‘(A) Milestone A approval. 
‘‘(B) The decision to release the request for proposals 
for development of the program or system. 
‘‘(C) Milestone B approval. 
‘‘(D) Each subsequent milestone. 
‘‘(E) Review of any decision to enter into full-rate 
production. 
‘‘(F) When there has been— 
‘‘(i) a significant change to the cost of the program 
or system; 
‘‘(ii) a critical change to the cost of the program 
or system; 
‘‘(iii) a significant change to the schedule of the 
program or system; or 
‘‘(iv) a significant change to the performance of 
the program or system. 
‘‘(G) Any other time considered relevant by the mile-
stone decision authority. 
‘‘(2) If the milestone decision authority revises an acquisition 
strategy for a program or system, the milestone decision authority 
shall provide notice of the revision to the congressional defense 
committees. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) The term ‘major defense acquisition program’ has the 
meaning provided in section 2430 of this title. 
‘‘(2) The term ‘major system’ has the meaning provided 
in section 2302(5) of this title. 
‘‘(3) The term ‘Milestone A approval’ means a decision 
to enter into technology maturation and risk reduction pursuant 
to guidance prescribed by the Secretary of Defense for the 
management of Department of Defense acquisition programs. 
‘‘(4) The term ‘Milestone B approval’ has the meaning pro-
vided in section 2366(e)(7) of this title. 
‘‘(5) The term ‘milestone decision authority’, with respect 
to a major defense acquisition program, major automated 
information system, or major system, means the official within 
the Department of Defense designated with the overall respon-
sibility and authority for acquisition decisions for the program 
or system, including authority to approve entry of the program 
or system into the next phase of the acquisition process. 
‘‘(6) The term ‘management capacity’, with respect to a 
major defense acquisition program, major automated informa-
tion system, or major system, means the capacity to manage 
the program or system through the use of highly qualified 
organizations and personnel with appropriate experience, 
knowledge, and skills. 
‘‘(7) The term ‘significant change to the cost’, with respect 
to a major defense acquisition program or major system, means
H. R. 1735—175 
a significant cost growth threshold, as that term is defined 
in section 2433(a)(4) of this title. 
‘‘(8) The term ‘critical change to the cost’, with respect 
to a major defense acquisition program or major system, means 
a critical cost growth threshold, as that term is defined in 
section 2433(a)(5) of this title. 
‘‘(9) The term ‘significant change to the schedule’, with 
respect to a major defense acquisition program, major auto-
mated information system, or major system, means any 
schedule delay greater than six months in a reported event.’’. 
(2) CLERICAL AMENDMENT.—The table of sections at the 
beginning of such chapter is amended by inserting after the 
item relating to section 2431 the following new item: 
‘‘2431a. Acquisition strategy.’’. 
(b) ADDITIONAL AMENDMENTS.— 
(1) Section 2350a(e) of such title is amended— 
(A) in the subsection heading, by striking ‘‘DOCUMENT’’; 
(B) in paragraph (1), by striking ‘‘the Under Secretary 
of Defense for’’ and all that follows through ‘‘of the Board’’ 
and inserting ‘‘opportunities for such cooperative research 
and development shall be addressed in the acquisition 
strategy for the project’’; and 
(C) in paragraph (2)— 
(i) in the matter preceding subparagraph (A)— 
(I) by striking ‘‘document’’ and inserting 
‘‘discussion’’; and 
(II) by striking ‘‘include’’ and inserting ‘‘con-
sider’’; 
(ii) in subparagraph (A), by striking ‘‘A statement 
indicating whether’’ and inserting ‘‘Whether’’; 
(iii) in subparagraph (B)— 
(I) by striking ‘‘by the Under Secretary of 
Defense for Acquisition, Technology, and Logis-
tics’’; and 
(II) by striking ‘‘of the United States under 
consideration by the Department of Defense’’; and 
(iv) in subparagraph (D), by striking ‘‘The rec-
ommendation of the Under Secretary’’ and inserting 
‘‘A 
recommendation 
to 
the 
milestone 
decision 
authority’’. 
(2) Section 803 of the Bob Stump National Defense 
Authorization Act for Fiscal Year 2003 (Public Law 107–314; 
10 U.S.C. 2430 note) is repealed. 
SEC. 822. REVISION TO REQUIREMENTS RELATING TO RISK MANAGE-
MENT IN DEVELOPMENT OF MAJOR DEFENSE ACQUISI-
TION PROGRAMS AND MAJOR SYSTEMS. 
(a) RISK MANAGEMENT AND MITIGATION REQUIREMENTS.— 
(1) IN GENERAL.—Chapter 144 of title 10, United States 
Code, is amended by inserting after section 2431a (as added 
by section 821) the following new section: 
‘‘§ 2431b. Risk management and mitigation in major defense 
acquisition programs and major systems 
‘‘(a) REQUIREMENT.—The Secretary of Defense shall ensure that 
the initial acquisition strategy (required under section 2431a of
H. R. 1735—176 
this title) approved by the milestone decision authority and any 
subsequent revisions include the following: 
‘‘(1) A comprehensive approach for managing and miti-
gating risk (including technical, cost, and schedule risk) during 
each of the following periods or when determined appropriate 
by the milestone decision authority: 
‘‘(A) The period preceding engineering manufacturing 
development, or its equivalent. 
‘‘(B) The period preceding initial production. 
‘‘(C) The period preceding full-rate production. 
‘‘(2) An identification of the major sources of risk in each 
of the periods listed in paragraph (1) to improve programmatic 
decisionmaking and appropriately minimize and manage pro-
gram concurrency. 
‘‘(b) APPROACH TO MANAGE AND MITIGATE RISKS.—The com-
prehensive approach to manage and mitigate risk included in the 
acquisition strategy for purposes of subsection (a)(1) shall, at a 
minimum, include consideration of risk mitigation techniques such 
as the following: 
‘‘(1) Prototyping (including prototyping at the system, sub-
system, or component level and competitive prototyping, where 
appropriate) and, if prototyping at either the system, sub-
system, or component level is not used, an explanation of why 
it is not appropriate. 
‘‘(2) Modeling and simulation, the areas that modeling and 
simulation will assess, and identification of the need for 
development of any new modeling and simulation tools in order 
to support the comprehensive strategy. 
‘‘(3) Technology demonstrations and decision points for dis-
ciplined transition of planned technologies into programs or 
the selection of alternative technologies. 
‘‘(4) Multiple design approaches. 
‘‘(5) Alternative designs, including any designs that meet 
requirements but do so with reduced performance. 
‘‘(6) Phasing of program activities or related technology 
development efforts in order to address high-risk areas as early 
as feasible. 
‘‘(7) Manufacturability and industrial base availability. 
‘‘(8) Independent risk element assessments by outside sub-
ject matter experts. 
‘‘(9) Schedule and funding margins for identified risks. 
‘‘(c) PREFERENCE FOR PROTOTYPING.—To the maximum extent 
practicable and consistent with the economical use of available 
financial resources, the milestone decision authority for each major 
defense acquisition program shall ensure that the acquisition 
strategy for the program provides for— 
‘‘(1) the production of competitive prototypes at the system 
or subsystem level before Milestone B approval; or 
‘‘(2) if the production of competitive prototypes is not prac-
ticable, the production of single prototypes at the system or 
subsystem level. 
‘‘(d) DEFINITIONS.—In this section, the terms ‘major defense 
acquisition program’ and ‘major system’ have the meanings provided 
in section 2431a of this title.’’. 
(2) CLERICAL AMENDMENT.—The table of sections at the 
beginning of such chapter is amended by inserting after the
H. R. 1735—177 
item relating to section 2431a, as so added, the following new 
item: 
‘‘2431b. Risk reduction in major defense acquisition programs and major systems.’’. 
(b) REPEAL
OF SUPERSEDED PROVISION.—Section 203 of the 
Weapon Systems Acquisition Reform Act of 2009 (10 U.S.C. 2430 
note) is repealed. 
SEC. 823. REVISION OF MILESTONE A DECISION AUTHORITY RESPON-
SIBILITIES FOR MAJOR DEFENSE ACQUISITION PRO-
GRAMS. 
(a) REVISION TO MILESTONE A REQUIREMENTS.—Section 2366a 
of title 10, United States Code, is amended to read as follows: 
‘‘§ 2366a. Major defense acquisition programs: determination 
required before Milestone A approval 
‘‘(a) RESPONSIBILITIES.—Before granting Milestone A approval 
for a major defense acquisition program or a major subprogram, 
the milestone decision authority for the program or subprogram 
shall ensure that— 
‘‘(1) information about the program or subprogram is suffi-
cient to warrant entry of the program or subprogram into 
the risk reduction phase; 
‘‘(2) the Secretary of the military department concerned 
and the Chief of the armed force concerned concur in the 
cost, schedule, technical feasibility, and performance trade-offs 
that have been made with regard to the program; and 
‘‘(3) there are sound plans for progression of the program 
or subprogram to the development phase. 
‘‘(b) WRITTEN DETERMINATION REQUIRED.—A major defense 
acquisition program or subprogram may not receive Milestone A 
approval or otherwise be initiated prior to Milestone B approval 
until the milestone decision authority determines in writing, after 
consultation with the Joint Requirements Oversight Council on 
matters related to program requirements and military needs— 
‘‘(1) that the program fulfills an approved initial capabilities 
document; 
‘‘(2) that the program has been developed in light of appro-
priate market research; 
‘‘(3) if the program duplicates a capability already provided 
by an existing system, the duplication provided by such program 
is necessary and appropriate; 
‘‘(4) that, with respect to any identified areas of risk, there 
is a plan to reduce the risk; 
‘‘(5) that planning for sustainment has been addressed 
and that a determination of applicability of core logistics 
capabilities requirements has been made; 
‘‘(6) that an analysis of alternatives has been performed 
consistent with study guidance developed by the Director of 
Cost Assessment and Program Evaluation; 
‘‘(7) that a cost estimate for the program has been sub-
mitted, with the concurrence of the Director of Cost Assessment 
and Program Evaluation, and that the level of resources 
required to develop, procure, and sustain the program is suffi-
cient for successful program execution; and
H. R. 1735—178 
‘‘(8) that the program or subprogram meets any other 
considerations the milestone decision authority considers rel-
evant. 
‘‘(c) SUBMISSION TO CONGRESS.—At the request of any of the 
congressional defense committees, the Secretary of Defense shall 
submit to the committee an explanation of the basis for a determina-
tion made under subsection (b) with respect to a major defense 
acquisition program, together with a copy of the written determina-
tion. The explanation shall be submitted in unclassified form, but 
may include a classified annex. 
‘‘(d) DEFINITIONS.—In this section: 
‘‘(1) The term ‘major defense acquisition program’ has the 
meaning provided in section 2430 of this title. 
‘‘(2) The term ‘initial capabilities document’ means any 
capabilities requirement document approved by the Joint 
Requirements Oversight Council that establishes the need for 
a materiel approach to resolve a capability gap. 
‘‘(3) The term ‘Milestone A approval’ means a decision 
to enter into technology maturation and risk reduction pursuant 
to guidance prescribed by the Secretary of Defense for the 
management of Department of Defense acquisition programs. 
‘‘(4) The term ‘Milestone B approval’ has the meaning pro-
vided that term in section 2366(e)(7) of this title. 
‘‘(5) The term ‘core logistics capabilities’ means the core 
logistics capabilities identified under section 2464(a) of this 
title. 
‘‘(6) the term ‘major subprogram’ means a major subpro-
gram of a major defense acquisition program designated under 
section 2430a(a)(1) of this title. 
‘‘(7) The term ‘milestone decision authority’, with respect 
to a major defense acquisition program or a major subprogram, 
means the official within the Department of Defense designated 
with the overall responsibility and authority for acquisition 
decisions for the program or subprogram, including authority 
to approve entry of the program or subprogram into the next 
phase of the acquisition process.’’. 
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 139 of such title is amended by striking the item 
relating to section 2366a and inserting the following: 
‘‘2366a. Major defense acquisition programs: determination required before Mile-
stone A approval.’’. 
SEC. 824. REVISION OF MILESTONE B DECISION AUTHORITY RESPON-
SIBILITIES FOR MAJOR DEFENSE ACQUISITION PRO-
GRAMS. 
(a) REVISION TO MILESTONE B REQUIREMENTS.—Section 2366b 
of title 10, United Stated Code, is amended to read as follows: 
‘‘§ 2366b. Major defense acquisition programs: certification 
required before Milestone B approval 
‘‘(a) CERTIFICATIONS AND DETERMINATION REQUIRED.—A major 
defense acquisition program may not receive Milestone B approval 
until the milestone decision authority—
H. R. 1735—179 
‘‘(1) has received a preliminary design review and conducted 
a formal post-preliminary design review assessment, and cer-
tifies on the basis of such assessment that the program dem-
onstrates a high likelihood of accomplishing its intended mis-
sion; 
‘‘(2) further certifies that the technology in the program 
has been demonstrated in a relevant environment, as deter-
mined by the milestone decision authority on the basis of an 
independent review and assessment by the Assistant Secretary 
of Defense for Research and Engineering, in consultation with 
the Deputy Assistant Secretary of Defense for Developmental 
Test and Evaluation; 
‘‘(3) determines in writing that— 
‘‘(A) the program is affordable when considering the 
ability of the Department of Defense to accomplish the 
program’s mission using alternative systems; 
‘‘(B) appropriate trade-offs among cost, schedule, tech-
nical feasibility, and performance objectives have been 
made to ensure that the program is affordable when consid-
ering the per unit cost and the total acquisition cost in 
the context of the total resources available during the 
period covered by the future-years defense program sub-
mitted during the fiscal year in which the certification 
is made; 
‘‘(C) reasonable cost and schedule estimates have been 
developed to execute, with the concurrence of the Director 
of Cost Assessment and Program Evaluation, the product 
development and production plan under the program; and 
‘‘(D) funding is available to execute the product 
development and production plan under the program, 
through the period covered by the future-years defense 
program submitted during the fiscal year in which the 
certification is made, consistent with the estimates 
described in subparagraph (C) for the program; 
‘‘(E) appropriate market research has been conducted 
prior to technology development to reduce duplication of 
existing technology and products; 
‘‘(F) the Department of Defense has completed an anal-
ysis of alternatives with respect to the program; 
‘‘(G) the Joint Requirements Oversight Council has 
accomplished its duties with respect to the program pursu-
ant to section 181(b) of this title, including an analysis 
of the operational requirements for the program; 
‘‘(H) life-cycle sustainment planning, including corro-
sion prevention and mitigation planning, has identified 
and evaluated relevant sustainment costs throughout 
development, production, operation, sustainment, and dis-
posal of the program, and any alternatives, and that such 
costs are reasonable and have been accurately estimated; 
‘‘(I) an estimate has been made of the requirements 
for core logistics capabilities and the associated sustaining 
workloads required to support such requirements; 
‘‘(J) there is a plan to mitigate and account for any 
costs in connection with any anticipated de-certification 
of cryptographic systems and components during the 
production and procurement of the major defense acquisi-
tion program to be acquired;