May 27, 2009
On May 22, 2009, President Obama signed into law the Weapons Systems Acquisition Reform Act of 2009. The legislation passed unanimously in the House and Senate the previous week. In April, the Government Accountability Office issued a report regarding the Pentagon’s weapons systems, which found that 95 major systems exceeded their original budgets by $295 billion and on average were delivered two years late. Obama announced that the new law will crack down on defense programs with huge cost overruns and increase competition for contracts.
The new law amends certain sections of Title 10 of the U.S. Code. Specifically, the law creates the position of Director of Cost Assessment and Program Evaluation in the Department of Defense, appointed by the President, to provide independent analysis and advice to the Secretary of Defense and other senior DOD officials. The functions and personnel of the Office of Program Analysis and Evaluation of the Department of Defense, including the functions of the Cost Analysis Improvement Group, will be transferred to the newly created Office of the Director of Cost Assessment and Program Evaluation.
The Director’s responsibilities will include cost estimation and cost analysis for DOD acquisition programs, analysis and advice on matters relating to the planning and programming phases of acquisitions, reviewing, analyzing and evaluating programs for executing approved strategies and policies, ensuring that information on programs is presented accurately and completely, and assessing the effect of spending by the Department of Defense on the U.S. economy.
The law provides that the Director of Cost Assessment and Program Evaluation should create "policies and procedures for the conduct of cost estimation and cost analysis for the acquisition programs of the Department of Defense," "review all cost estimates and cost analyses conducted in connection with major defense acquisition programs and major automated information system programs," and "conduct independent cost estimates and cost analyses for major defense acquisition programs and major automated information system programs."
The Director is also required to "prepare an annual report summarizing the cost estimation and cost analysis activities of the Department of Defense during the previous year and assessing the progress of the Department in improving the accuracy of its cost estimates and analyses." The report will be transmitted to the Secretary of Defense and to Congress. The law explicitly provides that this report may not contain any proprietary or source selection sensitive information that could undermine procurement integrity.
The law also puts additional obligations on the Department of Defense:
- The Joint Requirements Oversight Council shall seek and consider input from commanders of combatant commands prior to identifying joint military requirements;
- The Secretary of Defense shall revise the Defense Federal Acquisition Regulations "to provide uniform guidance and tighten existing requirements for organizational conflicts of interest by contractors in major defense acquisition programs;" and
- The Secretary of Defense shall carry out a program to recognize excellent performance military and civilian DOD personnel in the acquisition of products and services and the law authorizes cash bonuses as part of the program.
Gibson Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding this issue. Please contact the Gibson Dunn attorney with whom you work, or any of the following partners in the firm’s Government and Commercial Contracts Practice Group:
Joseph D. West – Washington, D.C. (202-955-8658, [email protected])
Karen L. Manos – Washington, D.C. (202-955-8536, [email protected])
Diana G. Richard – Washington, D.C. (202-877-3572, [email protected])
Timothy J. Hatch – Los Angeles (213-229-7368, [email protected])
© 2009 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.