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 123STA T . 1 709PUBLIC LA W 111 – 23 —M A Y 22, 2009 ‘ ‘ (2)Eachrepo r tund er th is su b section sha l lbesub m itted concurrentl y to the S ecretary o fD efense , the U nder Secretary of Defense for A c q uisition, T echnolo g y, and L ogistics, the Under Sec - retary of Defense ( C omptroller), and the congressional defense committees not later than 10 days after the transmittal to Congress of the budget of the P resident for the ne x t fiscal year (as submitted pursuant to section 110 5 of title 3 1) . ‘‘(3)(A) Each report submitted to the congressional defense committees under this subsection shall be submitted in unclassified form, but may include a classified annex. ‘‘( B ) The Director shall ensure that a report submitted under this subsection does not include any information, such as propri- etary or source selection sensiti v e information, that could under- mine the integrity of the acquisition process. ‘‘(C) The unclassified version of each report submitted to the congressional defense committees under this subsection shall be posted on an I nternet w ebsite of the Department of Defense that is available to the public. ‘‘( 4 ) The Secretary of Defense may comment on any report of the Director to the congressional defense committees under this subsection. ‘‘(f) S TAF F. — The Secretary of Defense shall ensure that the Director of Cost Assessment and Program Evaluation has sufficient professional staff of military and civilian personnel to enable the Director to carry out the duties and responsibilities of the Director under this section. ’ ’. (2) C LERIC ALA M E ND MENT.—The table of sections at the beginning of chapter 13 7 of such title is amended by adding at the end the following new item

‘ 23 3 4.Indep enden tcos t est ima tion and cost ana ly sis. ’ ’. (c) TRAN S FER O F PERSONNEL AND FU NCTIONS.— (1) TRANSFER OF FUNCTIONS.—The functions of the O ffice of Program Analysis and Evaluation of the Department of Defense, including the functions of the Cost Analysis Improve- ment G roup, are hereby transferred to the Office of the Director of Cost Assessment and Program Evaluation. (2) TRANSFER OF P ERSONNEL TO DEPUT Y DIRECTOR FOR INDE- PENDENT COST ASSESSMENT.—The personnel of the Cost Anal- ysis Improvement Group are hereby transferred to the Deputy Director for Cost Assessment in the Office of the Director of Cost Assessment and Program Evaluation. (3) TRANSFER OF PERSONNEL TO DEPUTY DIRECTOR FOR PRO- G RAM ANALYSIS AND E V ALUATION.—The personnel (other than the personnel transferred under paragraph (2)) of the Office of Program Analysis and Evaluation are hereby transferred to the Deputy Director for Program Evaluation in the Office of the Director of Cost Assessment and Program Evaluation. (d) CONFORMING AMENDMENTS.— (1) Section 1 8 1(d) of title 10, United States Code, is amended by stri k ing ‘‘Director of the Office of Program Analysis and Evaluation’’ and inserting ‘‘Director of Cost Assessment and Program Evaluation’’. (2) Section 230 6 b(i)(1)(B) of such title is amended by striking ‘‘Cost Analysis Improvement Group of the Department of Defense’’ and inserting ‘‘Director of Cost Assessment and Program Analysis’’. 10USC 1 39cnote.W e bp o s t i n g. Pu b l ic in f o rma tion.


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 123STA T . 1 7 1 0PUBLIC LA W 111 – 23 —M A Y 22, 200 9(3)Section2 3 6 6 a (a)( 4 )o fsu c h tit l eisa m en d ed by inse r tin g‘ ‘ ,w ith the concurrence of the D irector of C ost A ssessment and P rogram Ev aluation, ’ ’ after ‘‘has been submitted’’ . (4) Section 2366b(a)( 1 )(C) of such title is amended by inserting ‘‘, with the concurrence of the Director of Cost Assess - ment and Program Evaluation,’’ after ‘‘have been develo p ed toe x ecute’’. ( 5 ) Subparagraph (A) of section 2434(b)(1) of such title is amended to read as follows ‘‘(A) be prepared or approved by the Director of Cost Assessment and Program Evaluation and’’. (6) Section 2445c(f)(3) of such title is amended by stri k ing ‘‘are reasonable’’ and inserting ‘‘have been determined, with the concurrence of the Director of Cost Assessment and Pro- gram Evaluation, to be reasonable’’. (e) REPORT O NM ON I TORIN G O FO PER A TING AN D S U PPORT CO S TS FOR MA J OR DEFENSE A CQ UISITION PROGRA M S. — (1) REPORT TO SECRETAR Y OF DEFENSE.— N ot later than one year after the date of the enactment of this Act, the Director of Cost Assessment and Program Evaluation under section 13 9 coftitle1 0U nited States Code (as added by sub- section (a)), shall review existing systems and methods of the Department of Defense for tracking and assessing operating and support costs on ma j or defense ac q uisition programs and submit to the Secretary of Defense a report on the finding and recommendations of the Director as a result of the review, including an assessment by the Director of the feasibility and advisability of establishing baselines for operating and support costs under section 2435 of title 10, United States Code. (2) T RANSMITTA L TO CONGRESS.—Not later than 30 days after receiving the report required by paragraph (1), the Sec- retary shall transmit the report to the congressional defense committees, together with any comments on the report the Secretary considers appropriate. SEC.102 . DIR EC TO RSO F DE V E L O PM E N T A L TEST AND EVAL U ATION AND S Y STEMS EN G INEERING. (a) I N G ENERAL.— (1) ESTA B LIS H MENT OF POSITIONS.—Chapter 4 of title 10, United States Code, as amended by section 101(a) of this Act, is further amended by inserting after section 139c the following new section: ‘ ‘ §139d.Directo ro f De v e l o pm e n t a l T e s t and E val u ation Director of Sy stems En g ineering
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oint guidance ‘‘(a) DIRECTOR OF DE V ELOPMENTAL TEST AND EVALUATION.— ‘‘(1) APPOINTMENT.—There is a Director of Developmental Test and Evaluation, who shall be appointed by the Secretary of Defense from among individuals with an expertise in test and evaluation. ‘‘(2) PRINCIPAL ADVISOR FOR DEVELOPMENTAL TEST AND EVALUATION.—The Director shall be the principal advisor to the Secretary of Defense and the Under Secretary of Defense for Acquisition, Technology, and L ogistics on developmental test and evaluation in the Department of Defense. ‘‘(3) SUPERVISION.—The Director shall be subject to the supervision of the Under Secretary of Defense for Acquisition, Revi e w.

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 123STA T . 1 7 11 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9Technol o gy,a n dL og ist ics and shall r e p ort to the U nder S ec - retary .‘ ‘ (4)CO O RDINAT ION W IT H DIR EC TOR O FSY STE M S EN G INEERING. — The D irector o f De v elop m ental Test and E val u ation shall closely coordinate w ith the Director of Systems Engineering to ensure that the developmental test and evalua- tion activities of the Department of Defense are fully integrated into and consistent with the systems engineering and develop- ment planning processes of the Department. ‘‘( 5 )D U TIES.—The Director shall— ‘‘( A ) develop policies and guidance for— ‘‘(i) the conduct of developmental test and evalua- tion in the Department of Defense (including integra- tion and developmental testing of software) ‘‘(ii) in coordination with the Director of O per- ational Test and Evaluation, the integration of develop- mental test and evaluation with operational test and evaluation; ‘‘(iii) the conduct of developmental test and evalua- tion conducted j ointly b y more than one military department or Defense Agency; ‘‘( B ) review and approve the developmental test and evaluation plan within the test and evaluation master plan for each major defense ac q uisition program of the Depart- ment of Defense; ‘‘(C) monitor and review the developmental test and evaluation activities of the major defense acquisition pro- grams; ‘‘(D) provide advocacy, oversight, and guidance to ele- ments of the acquisition wor k force responsible for develop- mental test and evaluation; ‘‘(E) periodically review the organi z ations and capabili- ties of the military departments with respect to develop- mental test and evaluation and identify needed changes or improvements to such organizations and capabilities, and provide input regarding needed changes or improve- ments for the test and evaluation strategic plan developed in accordance with section 196 (d) of this title; and ‘‘( F ) perform such other activities relating to the developmental test and evaluation activities of the Depart- ment of Defense as the Under Secretary of Defense for Acquisition, Technology, and Logistics may prescribe. ‘‘(6) ACCESS TO RECORDS.—The Secretary of Defense shall ensure that the Director has access to all records and data of the Department of Defense (including the records and data of each military department and including classified and pro- priety information, as appropriate) that the Director considers necessary in order to carry out the Director ’ s duties under this subsection. ‘‘( 7 ) CONCURRENT SER V ICE AS DIRECTOR OF DE P ARTMENT OF DEFENSE TEST RESOURCES MANAGEMENT CENTER.—The indi- vidual serving as the Director of Developmental Test and Evaluation may also serve concurrently as the Director of the Department of Defense Test R esource M anagement Center under section 196 of this title. ‘‘(b) DIRECTOR OF SYSTEMS ENGINEERING.— Polic i es.


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 123STA T . 1 7 12 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (1)AP P OINTME NT .—Ther e isaD ire cto ro fSy ste m s Eng ineering ,w ho sha l l b ea p pointe d by the Secretary of Defense from among indi v id u als with an e x pertise in systems engineering and development planning. ‘‘( 2 ) PR IN C IP AL A DV I S OR F ORS Y STEMS EN G INEERING AND DEVELOPMENT PLANNING.—The Director shall be the principal advisor to the Secretary of Defense and the U nder Secretary of Defense for Ac q uisition, Technology, and L ogistics on systems engineering and development planning in the Department of Defense. ‘‘( 3 )S U PERVISION.—The Director shall be sub j ect to the supervision of the Under Secretary of Defense for Acquisition, Technology, and Logistics and shall report to the Under Sec - retary. ‘‘( 4 ) C OORDINATION W IT H DIRECTOR OF DEVELOPMENTAL TEST AND EVALUATION.—The Director of Systems Engineering shall closely coordinate with the Director of Developmental Test and Evaluation to ensure that the developmental test and evaluation activities of the Department of Defense are fully integrated into and consistent with the systems engineering and development planning processes of the Depart- ment. ‘‘( 5 ) DUTIES.—The Director shall— ‘‘(A) develop policies and guidance for— ‘‘(i) the use of systems engineering principles and best practices, generally ‘‘(ii) the use of systems engineering approaches to enhance reliability, availability, and maintainability on major defense acquisition programs; ‘‘(iii) the development of systems engineering master plans for major defense acquisition programs including systems engineering considerations in sup- port of lifecycle management and sustainability; and ‘‘(iv) the inclusion of provisions relating to systems engineering and reliability growth in requests for pro- posals; ‘‘( B ) review and approve the systems engineering master plan for each major defense acquisition program; ‘‘(C) monitor and review the systems engineering and development planning activities of the major defense acquisition programs; ‘‘(D) provide advocacy, oversight, and guidance to ele- ments of the acquisition wor k force responsible for systems engineering, development planning, and lifecycle manage- ment and sustainability functions; ‘‘(E) provide input on the inclusion of systems engineering requirements in the process for consideration of joint military requirements by the J oint R equirements O versight Council pursuant to section 1 8 1 of this title, including specific input relating to each capabilities development document; ‘‘( F ) periodically review the organi z ations and capabili- ties of the military departments with respect to systems engineering, development planning, and lifecycle manage- ment and sustainability, and identify needed changes or improvements to such organizations and capabilities; and Polic i es.


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 123STA T . 1 7 13 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (G)perfo r msuch o t her a ct iv ities re l ati ng tothes y s - tems engineering an d development planning activities of the D epartment of Defense as the U nder S ecretary of Defense for A c q uisition ,T echnology, and L ogistics may pre- scri b e . ‘‘( 6 )A C C ES S TOR ECOR D S. — The Director shall have access to any records or data of the Department of Defense (including the records and data of each military department and including classified and proprietary information as appropriate) that the Director considers necessary to revie w in order to carry out the Director ’ s duties under this subsection. ‘‘(c) J O IN T ANN UALR E P ORT.— N ot later than M arch 31 each year, beginning in 20 10, the Director of Developmental Test and E valuation and the Director of Systems Engineering shall j ointly submit to the congressional defense committees a report on the activities underta k en pursuant to subsections (a) and (b) during the preceding year. Each report shall include a section on activities relating to the major defense acquisition programs which shall set forth, at a minimum, the following ‘‘(1) A discussion of the e x tent to which the major defense acquisition programs are fulfilling the objectives of their sys- tems engineering master plans and developmental test and evaluation plans. ‘‘(2) A discussion of the waivers of and deviations from requirements in test and evaluation master plans, systems engineering master plans, and other testing requirements that occurred during the preceding year with respect to such pro- grams, any concerns raised by such waivers or deviations, and the actions that have been taken or are planned to be taken to address such concerns. ‘‘(3) An assessment of the organi z ation and capabilities of the Department of Defense for systems engineering, develop- ment planning, and developmental test and evaluation with respect to such programs. ‘‘( 4 ) Any comments on such report that the Secretary of Defense considers appropriate. ‘‘(d) JOINT GUIDANCE.—The Director of Developmental Test and Evaluation and the Director of Systems Engineering shall jointly, in coordination with the official designated by the Secretary of Defense under section 103 of the W eapon Systems Acquisition Reform Act of 200 9, issue guidance on the following: ‘‘(1) The development and tracking of detailed measurable performance criteria as part of the systems engineering master plans and the developmental test and evaluation plans within the test and evaluation master plans of major defense acquisi- tion programs. ‘‘(2) The use of developmental test and evaluation to measure the achievement of specific performance objectives within a systems engineering master plan. ‘‘(3) A system for storing and tracking information relating to the achievement of the performance criteria and objectives specified pursuant to this subsection. ‘‘(e) MA J OR DE F ENSE AC Q UISITION P RO G RA M DEFINED.— I n this section, the term ‘major defense acquisition program’ has the meaning given that term in section 2430 of this title.’’. (2) C LERICAL AMENDMENT.—The table of sections at the beginning of chapter 4 of such title, as amended by section Ef f ectiv e da te .


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 123STA T . 1 7 1 4PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 910 1 (a)ofthisAc t , isf ur th e ra m e nd ed by insertin g after the item re l ating to section 1 39 c the follo w ing new item

‘ 139d.Directo ro f De v e l o pm e n t a l T e s t and E val u ation Director of Sy stems En g i - neering
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oint guidance. ’ ’. (b) DEV E LOPM E NTA L T E S TAN DE VAL U AT I ON AND SY STEMS EN G INEE R INGINT H E M ILITARY DEPARTMENTS AND DE F ENSE AGEN -C IES .— (1) P LANS.—The ser v ice ac q uisition e x ecutive of each mili- tary de p artment and each Defense Agency with responsibility forama j or defense acquisition program shall develop and implement plans to ensure the military department or Defense Agency concerned has provided appropriate resources for each of the following: (A) Developmental testing organi z ations with adequate numbers of trained personnel in order to— (i) ensure that developmental testing requirements are appropriately addressed in the translation of oper- ational requirements into contract specifications, in the source selection process, and in the preparation of requests for proposals on all major defense acquisition programs (ii) participate in the planning of developmental test and evaluation activities, including the prepara- tion and approval of a developmental test and evalua- tion plan within the test and evaluation master plan for each major defense acquisition program; and (iii) participate in and oversee the conduct of developmental testing, the analysis of data, and the preparation of evaluations and reports based on such testing. ( B ) Development planning and systems engineering organizations with adequate numbers of trained personnel in order to— (i) support k ey requirements, acquisition, and budget decisions made for each major defense acquisi- tion program prior to Milestone A approval and Mile- stone B approval through a rigorous systems analysis and systems engineering process; (ii) include a robust program for improving reli- ability, availability, maintainability, and sustainability as an integral part of design and development within the systems engineering master plan for each major defense acquisition program; and (iii) identify systems engineering requirements, including reliability, availability, maintainability, and lifecycle management and sustainability requirements, during the J oint C apabilities I ntegration Development System process, and incorporate such systems engineering requirements into contract requirements for each major defense acquisition program. ( 2 ) R EPORTS B Y SERVICE AC Q UISITION E X ECUTIVES.— N ot later than 1 8 0 days after the date of the enactment of this Act, the service acquisition executive of each military depart- ment and each Defense Agency with responsibility for a major defense acquisition program shall submit to the Director of 10USC243 0 note.


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 123STA T . 1 7 1 5PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9Dev e lopm e nta l T e s tan dE val u at i onandt h eDi r e c tor o fSy stems En g ineering a report on the e x tent to w hich —(A) such military department or Defense Agency has implemented , or is implementing, the plan re q uired b y paragraph ( 1 ) and ( B ) additional authorities or resources are needed to attract, develop, retain, and reward developmental test and evaluation personnel and systems engineers with appropriate levels of hands - on experience and technical expertise to meet the needs of such military department or Defense Agency . ( 3 )A S S E SS M E NTOFR E P ORTS BYDI RE C TORS OF DE V E L OP- MENT A L TEST AND EVAL U ATION AND SYSTEMS EN G INEERING.— The first annual report submitted to C ongress by the Director of Developmental Test and Evaluation and the Director of Systems Engineering under section 13 9 d(c) of title 1 0, U nited States Code (as added by subsection (a)), shall include an assessment by the Directors of the reports submitted by the service acquisition executives to the Directors under paragraph ( 2 ). SEC.103 . P E RFO R MAN CE ASSESSMEN T SAN D ROOT CA U SE ANA LY SES FOR MA J OR DEFENSE AC Q U I SITION PRO G RAMS. (a) DESIGNATION OF SENIOR O FFICIAL R ESPONSIBILITY FOR P ERFORMANCE ASSESSMENTS AND ROOT CAUSE ANALYSES.— (1) I N GENERAL.—The Secretary of Defense shall designate a senior official in the Office of the Secretary of Defense as the principal official of the Department of Defense responsible for conducting and overseeing performance assessments and root cause analyses for ma j or defense acquisition programs. (2) N O PROGRAM E X ECUTION RESPONSIBILITY.—The Sec- retary shall ensure that the senior official designated under paragraph (1) is not responsible for program execution. (3) STAFF AND RESOURCES.—The Secretary shall assign to the senior official designated under paragraph (1) appropriate staff and resources necessary to carry out official ’ s function under this section. (b) RESPONSIBILITIES.—The senior official designated under sub- section (a) shall be responsible for the following (1) Carrying out performance assessments of major defense acquisition programs in accordance with the requirements of subsection (c) periodically or when requested by the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology and L ogistics, the Secretary of a military depart- ment, or the head of a Defense Agency. (2) Conducting root cause analyses for major defense acquisition programs in accordance with the requirements of subsection (d) when required by section 2 4 33a(a)(1) of title 10, United States Code (as added by section 20 6 (a) of this Act), or when requested by the Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology and Logistics, the Secretary of a military department, or the head of a Defense Agency. (3) Issuing policies, procedures, and guidance governing the conduct of performance assessments and root cause analyses by the military departments and the Defense Agencies. 10USC243 0 note.


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 123STA T . 1 7 1 6PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9(4)Evalu a ting t he utilit yofp e r for m an c e metric s use d to measure the cost , schedule, and performance of ma j or defense ac q uisition programs, and ma k ing such recommendations to the S ecretary of D efense as the official considers appropriate to improve such metrics . ( 5 ) A dvising acquisition officials on performance issues regarding a major defense acquisition program that may arise — (A) prior to certification under section 2 4 3 3a of title 10, U nited States C ode (as so added) ( B ) prior to entry into full - rate production; or (C) in the course of consideration of any decision to request authori z ation of a multiyear procurement contract for the program. (c) PERFO R MANC EA S SESSMEN T S.— F or purposes of this section, a performance assessment w ith respect to a major defense acquisi- tion program is an evaluation of the following (1) T he cost, schedule, and performance of the program, relative to current metrics, including performance requirements and b aseline descriptions. (2) The e x tent to which the level of program cost, schedule, and performance predicted relative to such metrics is likely to result in the timely delivery of a level of capability to the warfighter that is consistent with the level of resources to be expended and provides superior value to alternative approaches that may be available to meet the same military requirement. (d) R OOT CA U SE ANA LY SES.—For purposes of this section and section 2433a of title 10, United States Code (as so added), a root cause analysis with respect to a major defense acquisition program is an assessment of the underlying cause or causes of shortcomings in cost, schedule, or performance of the program, including the role, if any, of— (1) unrealistic performance expectations; (2) unrealistic baseline estimates for cost or schedule; (3) immature technologies or excessive manufacturing or integration risk; (4) unanticipated design, engineering, manufacturing, or technology integration issues arising during program perform- ance; (5) changes in procurement quantities; ( 6 ) inadequate program funding or funding instability; ( 7 ) poor performance by government or contractor personnel responsible for program management; or ( 8 ) any other matters. (e) SU P PORT OF APPL I CA B LE CAPABILITIES AN D E X PERTISE.— The Secretary of Defense shall ensure that the senior official des- ignated under subsection (a) has the support of other Department of Defense officials with relevant capabilities and expertise needed to carry out the requirements of this section. (f) ANNUAL REPORT.— N ot later than M arch 1 each year, begin- ning in 2010, the official responsible for conducting and overseeing performance assessments and root cause analyses for major defense acquisition programs shall submit to the congressional defense committees a report on the activities undertaken under this section during the preceding year. Ef f ectiv e da te .


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 123STA T . 1 7 17 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9SEC.104 . A SSESS M E NTOF TEC H NO L O GI CAL MAT UR IT Y OF CRITICAL TECHNOLOGIES OF MA J OR D EFENSE AC Q UISITION P RO - GRAMS B Y THE DIRECTOR OF DEFENSE RESEARCH AND ENGINEERING. (a)AS S E SS M E NTBYDIR E C T O RO F DEFENSE R ESE A RC H AN DE N G INEERING .— ( 1 ) I N GENERA L .— Section 1 39 ao f tit l e1 0,U nite d State sC ode, is a m ended by addin g att h e end the follo w ing new s u bsection

‘(c)(1) T he Di r ector of Defense Research and Engineering, in consultation with the Director of De v elo p mental Test and Evalua - tion, shall periodically review and assess the technological maturity and integration ris k of critical technologies of the ma j or defense ac q uisition programs of the Department of Defense and report on the findings of such reviews and assessments to the Under Secretary of Defense for Acquisition, Technology, and L ogistics. ‘‘( 2 ) The Director shall submit to the Secretary of Defense and to the congressional defense committees by M arch 1 of each year a report on the technological maturity and integration risk of critical technologies of the major defense acquisition programs of the Department of Defense. ’ ’. (2) F IRST ANN U AL RE P ORT.—The first annual report under subsection (c)(2) of section 139a of title 10, United States Code (as added by paragraph (1)), shall be submitted to the congres- sional defense committees not later than March 1, 2010, and shall address the results of reviews and assessments conducted by the Director of Defense Research and Engineering pursuant to subsection (c)(1) of such section (as so added) during the preceding calendar year. (b) REPORT ON RESOURCES FOR IMPLEMENTATION.— N ot later than 120 days after the date of the enactment of this Act, the Director of Defense Research and Engineering shall submit to the congressional defense committees a report describing any additional resources that may be required by the Director, and by other research and engineering elements of the Department of Defense, to carry out the following: (1) The requirements under the amendment made by sub- section (a)(1). (2) The technological maturity assessments required by section 23 6 6b(a) of title 10, United States Code. (3) The requirements of Department of Defense Instruction 5 000, as revised. (c) TECHNOLOGICAL MATURITY STANDARDS.—Not later than 1 8 0 days after the date of the enactment of this Act, the Director of Defense Research and Engineering, in consultation with the Director of Developmental Test and Evaluation, shall develop knowledge-based standards against which to measure the techno- logical maturity and integration risk of critical technologies at key stages in the acquisition process for purposes of conducting the reviews and assessments of major defense acquisition programs required by subsection (c) of section 139a of title 10, United States Code (as so added). SEC. 10 5 . ROLE OF THE COMMANDERS OF THE COMBATANT COM- MANDS IN IDENTIFYING JOINT MILITARY REQUIREMENTS. (a) IN G ENERAL.—Section 181(d) of title 10, United States Code, as amended by section 101(d) of this Act, is further amended— Deadlin e .10USC 1 39 a n ot e. 10 USC 139a note. Deadline. R e p o r t s . Re v ie w. Reports.


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 123STA T . 1 7 1 8PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9(1)byinsert in g‘ ‘(1) ’ ’be fo re ‘‘ Th e U n d er S e c ret a ry’’ and ( 2 ) by adding at the end the fo l lo w ing new p aragraph ‘‘(2) The C o u ncil shall see k and consider input fro m the com - manders of the combatant commands in carrying out its mission under paragraphs (1) and (2) of subsection (b) and in conducting periodic re v iews in accordance with the re q uirements of subsection (e) . ’’. (b) INPUTFROM COMM A N DE R S O F COM B ATANT COMMANDS. — The J oint R equirements O versight Council in the D epartment of Defense shall seek and consider input from the commanders of combatant commands , in accordance with section 1 8 1(d) of title 1 0, United States Code (as amended by subsection (a)). Such input may include, but is not limited to, an assessment of the following: (1) A ny current or pro j ected missions or threats in the theater of operations of the commander of a combatant com- mand that would inform the assessment of a new joint military requirement. (2) The necessity and sufficiency of a proposed joint military requirement in terms of current and projected missions or threats. ( 3 ) The relative priority of a proposed joint military require- ment in comparison with other joint military requirements within the theater of operations of the commander of a combat- ant command. ( 4 ) The ability of partner nations in the theater of oper- ations of the commander of a combatant command to assist in meeting the joint military requirement or the benefit, if any, of a partner nation assisting in development or use of technologies developed to meet the joint military requirement. (c) COMPTRO L LER G ENERAL OF T H EUN I TED STATES RE V IE W OF IMPLEMENTATION.— (1) RE Q UIREMENT.— N ot later than two years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the Committees on Armed Serv- ices of the Senate and the H ouse of Representatives a report on the implementation of the requirements of— (A) subsection (d)(2) of section 181 of title 10, United States Code (as amended by subsection (a)), for the Joint Requirements Oversight Council to solicit and consider input from the commanders of the combatant commands; ( B ) the amendments to subsection (b) of section 181 of title 10, United States Code, made by section 9 42 of the National Defense Authori z ation Act for Fiscal Y ear 2008 ( P ublic L aw 110 – 181; 122 Stat. 28 7 ) and by section 201(b) of this Act; and (C) the requirements of section 201(c) of this Act. (2) M ATTERS C OVERED.—The report shall include, at a min- imum, an assessment of— (A) the e x tent to which the Council has effectively sought, and the commanders of the combatant commands have provided, meaningful input on proposed joint military requirements; (B) the quality and effectiveness of efforts to estimate the level of resources needed to fulfill joint military require- ments; and Deadlin e .R e ports . 10USC 1 8 1 note.


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 123STA T . 1 7 1 9PUBLIC LA W 111 – 23 —M A Y 22, 2 0 09 (C)the e x te n tt ow h ic htheCo u nci l h as consi d e r ed trade - o f fsa m on g cost , schedule, and p erformance o bj ec- ti v es .TI T LE II —ACQU I S ITI ONP OLIC YSEC.201 .C ON S ID E RAT ION O F TRADE - OFFS A M ON G COST , SC H ED UL E, AND P ERFORMANCE O BJ ECTI V ES IN DEPARTMENT OF DEFENSE AC Q UISITION PROGRAMS. (a) C ONSIDERAT ION O FT RADE- O FFS. — ( 1 ) I N G ENERA L .—The S ecretar y of D efense shall ensure that mechanisms are developed and implemented to re q uire consideration of trade-offs among cost, schedule, and perform- ance objectives as part of the process for developing require- ments for Department of Defense acquisition programs. ( 2 ) E LE M ENTS.—The mechanisms required under this sub- section shall ensure, at a minimum, that— ( A ) Department of Defense officials responsible for acquisition, budget, and cost estimating functions are pro- vided an appropriate opportunity to develop estimates and raise cost and schedule matters before performance objec- tives are established for capabilities for which the Chair- man of the J oint R equirements Oversight Council is the validation authority and ( B ) the process for developing requirements is struc- tured to enable incremental, evolutionary, or spiral acquisi- tion approaches, including the deferral of technologies that are not yet mature and capabilities that are li k ely to signifi- cantly increase costs or delay production until later incre- ments or spirals. (b) D U TIES OF JOINT RE Q UIREMENTS O V ERSIG H T COUN C IL.— Section 1 8 1(b) of title 1 0, U nited States Code, is amended— (1) in paragraph (1)— (A) by striking ‘ ‘and ’ ’ at the end of subparagraph (A); (B) by inserting ‘‘and’’ at the end of subparagraph (B) after the semicolon; and (C) by adding at the end the following new subpara- graph ‘‘(C) in ensuring the consideration of trade-offs among cost, schedule, and performance objectives for joint military requirements in consultation with the advisors specified in subsection (d);’’. (2) in paragraph ( 3 )— (A) by inserting ‘‘, in consultation with the Under Sec- retary of Defense (Comptroller), the Under Secretary of Defense for Acquisition, Technology, and L ogistics, and the Director of Cost Assessment and P erformance Evaluation,’’ after ‘‘assist the Chairman’’; and (B) by striking ‘‘and’’ after the semicolon at the end; (3) in paragraph ( 4 ), by striking the period at the end and inserting ‘‘; and’’; and (4) by adding at the end the following new paragraph: ‘‘( 5 ) assist the Chairman, in consultation with the com- manders of the combatant commands and the Under Secretary of Defense for Acquisition, Technology, and Logistics, in estab- lishing an objective for the overall period of time within which 10USC23 02 note.


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 123STA T . 1 7 2 0PUBLIC LA W 111 – 23 —M A Y 22, 200 9ani ni t ia loper ational c apa b ilit ysh o u l d be deli v ered to m eet each j oint military re q uirement .’ ’. ( c )REVI E WOFJ OI NTM I L IT ARY RE QU IRE M ENT S . —T he S ecretary o fD efense shall ensure that each ne w joint military requirement recommended by the Joint Requirements O versi g ht C ouncil is reviewed to ensure that the Joint Requirements Oversight Council has , in ma k ing such recommendation— ( 1 ) taken appropriate action to seek and consider input from the commanders of the combatant commands, in accord - ance with the requirements of section 1 8 1(d) of title 1 0, U nited States Code (as amended by section 10 5 (a) of this A ct) ( 2 ) engaged in consideration of trade-offs among cost, schedule, and performance objectives in accordance with the requirements of section 181(b)(1)(C) of title 10, United States Code (as added by subsection (b)); and ( 3 ) engaged in consideration of issues of joint portfolio management, including alternative material and non-material solutions, as provided in Department of Defense instructions for the development of joint military requirements. (d) STU D Y G UIDAN C E FOR ANALYSES OF ALTERNATIVES.—The Director of Cost Assessment and P rogram E valuation shall take the lead in the development of study guidance for an analysis of alternatives for each joint military requirement for which the Chairman of the Joint Requirements Oversight Council is the validation authority. I n developing the guidance, the Director shall solicit the advice of appropriate officials within the Department of Defense and ensure that the guidance requires, at a minimum— (1) full consideration of possible trade-offs among cost, schedule, and performance objectives for each alternative considered; and (2) an assessment of whether or not the joint military requirement can be met in a manner that is consistent with the cost and schedule objectives recommended by the Joint Requirements Oversight Council. (e) ANALYSIS OF ALTERNATIVES IN CERTIFICATION FOR MILE- STONE A.—Section 23 6 6a(a) of title 10, United States Code, as amended by section 101(d)(3) of this Act, is further amended— (1) by striking ‘ ‘and’’ at the end of paragraph (3); (2) by redesignating paragraph ( 4 ) as paragraph (5); and (3) by inserting after paragraph (3) the following new para- graph (4) ‘‘(4) that an analysis of alternatives has been performed consistent with study guidance developed by the Director of Cost Assessment and Program Evaluation; and’’. (f) DUTIES OF MILESTONE DECISION AUT H ORITY.—Section 2366b(a)(1)( B ) of such title is amended by inserting ‘‘appropriate trade-offs among cost, schedule, and performance objectives have been made to ensure that’’ before ‘‘the program is affordable’’. SEC.20 2. A C QUI SI T I ON ST R ATE G IES TO ENSURE CO MP ETITION T H ROUGHOUT THE L I F EC Y CLE OF MA J OR D EFENSE ACQUISITION PROGRAMS. (a) ACQUISITION STRATE G IES TO ENSURE COM P ETITION.—The Secretary of Defense shall ensure that the acquisition strategy for each major defense acquisition program includes— (1) measures to ensure competition, or the option of com- petition, at both the prime contract level and the subcontract 10USC243 0 note. 10USC1 8 1 note. 10 USC 181 note.


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 123STA T . 1 7 21 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9lev el (atsuch t i e ro rtiersasarea p propriate ) o f such pro g ra m throughout the life - c y cle of such program as a mea n s to improve contractor performance an d ( 2 ) ade q uate documentation of the rationale for the selec- tion of the su b contract tier or tiers under paragraph ( 1 ) . (b) MEASUR ES TOEN SURE C O MP E TI TION. — The measures to ensure competition , or the option of competition, for purposes of subsection (a)(1) may include measures to achieve the follo w ing, in appropriate cases if such measures are cost-effective (1) Competitive prototyping. (2) D ual-sourcing. ( 3 ) U nbundling of contracts. ( 4 ) F unding of ne x t-generation prototype systems or sub- systems. ( 5 ) Use of modular, open architectures to enable competi- tion for upgrades. ( 6 ) Use of build-to-print approaches to enable production through multiple sources. ( 7 ) A cquisition of complete technical data pac k ages. ( 8 ) P eriodic competitions for subsystem upgrades. ( 9 ) L icensing of additional suppliers. (1 0 ) Periodic system or program reviews to address long- term competitive effects of program decisions. (c) A D DITIONA L MEASURES TO ENSURE COMPETITION AT S U B - C ONTRACT LE V EL.—The Secretary shall take actions to ensure fair and ob j ective ‘ ‘make-buy ’ ’ decisions by prime contractors on major defense acquisition programs by— (1) requiring prime contractors to give full and fair consid- eration to qualified sources other than the prime contractor for the development or construction of major subsystems and components of major weapon systems; (2) providing for government surveillance of the process by which prime contractors consider such sources and deter- mine whether to conduct such development or construction in-house or through a subcontract; and (3) providing for the assessment of the extent to which a contractor has given full and fair consideration to qualified sources other than the contractor in sourcing decisions as a part of past performance evaluations. (d) CONSIDERATION O F COMPETITION T H ROU G HOUT O PERATION AND SUSTAINMENT OF MA J OR W EAPON S Y STEMS.—Whenever a deci- sion regarding source of repair results in a plan to award a contract for performance of maintenance and sustainment of a major weapon system, the Secretary shall take actions to ensure that, to the maximum extent practicable and consistent with statutory require- ments, contracts for such maintenance and sustainment are awarded on a competitive basis and give full consideration to all sources (including sources that partner or subcontract with public or private sector repair activities). (e) APPLICABILITY.— (1) STRATEGY AND MEASURES TO ENSURE COMPETITION.— The requirements of subsections (a) and (b) shall apply to any acquisition plan for a major defense acquisition program that is developed or revised on or after the date that is 60 days after the date of the enactment of this Act.


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 123STA T . 1 7 22 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9(2)AD D IT I ONAL A C TION S.—Theactionsr e qu ire dby sub - sections (c) and (d) sha l lbeta k en w ithin 180 days a f ter the date of the enact m ent of this Act. SEC.203 . PROT OT Y P ING RE QU IRE M ENTS F ORM AJ OR D EFENSE ACQUISITION PROGRAMS. (a) C O MPE TITI V E PR OTOT Y PIN G .— N ot later than 9 0 days after the date of the enactment of this Act , the S ecretary of D efense shall modify the g uidance of the De p artment of Defense relating to the operation of the acquisition system with respect to competi- ti v e prototyping for ma j or defense acquisition programs to ensure the following (1) That the acquisition strategy for each major defense acquisition program provides for competitive prototypes before M ilestone B approval (or K ey Decision Point B approval in the case of a space program) unless the Milestone Decision Authority for such program waives the requirement pursuant to paragraph (2). (2) That the Milestone Decision Authority may waive the requirement in paragraph (1) only— (A) on the basis that the cost of producing competitive prototypes e x ceeds the expected life-cycle benefits (in con- stant dollars) of producing such prototypes, including the benefits of improved performance and increased techno- logical and design maturity that may be achieved through competitive prototyping or (B) on the basis that, but for such waiver, the Depart- ment would be unable to meet critical national security objectives. ( 3 ) That whenever a Milestone Decision Authority author- i z es a waiver pursuant to paragraph (2), the Milestone Decision Authority— (A) shall require that the program produce a prototype before Milestone B approval (or Key Decision Point B approval in the case of a space program) if the expected life-cycle benefits (in constant dollars) of producing such prototype exceed its cost and its production is consistent with achieving critical national security objectives; and (B) shall notify the congressional defense committees in writing not later than 30 days after the waiver is author- ized and include in such notification the rationale for the waiver and the plan, if any, for producing a prototype. ( 4 ) That prototypes may be required under paragraph (1) or (3) for the system to be acquired or, if prototyping of the system is not feasible, for critical subsystems of the system. (b) COMPTROLLER G ENERAL R EVIE W O F CERTAIN W AIVERS.— (1) NOTICE TO COMPTROLLER GENERAL.—Whenever a Mile- stone Decision Authority authorizes a waiver of the requirement for prototypes pursuant to paragraph (2) of subsection (a) on the basis of excessive cost, the Milestone Decision Authority shall submit the notification of the waiver, together with the rationale, to the Comptroller General of the U nited States at the same time it is submitted to the congressional defense committees. (2) COMPTROLLER GENERAL REVIEW.—Not later than 6 0 days after receipt of a notification of a waiver under paragraph (1), the Comptroller General shall— Notif i ca tio n.W ai ver a u t h orit y . D ea dl ine s . 10USC243 0 note. Deadline.


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 123STA T . 1 7 23 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9(A)revi e wth er a ti on a l e f or the waiver an d ( B ) subm it to the c on g ressional defense committees a written assessment of the rationale for the waiver .SEC.204 . A C TION STOI D ENTI FY AND ADD R ESS SYSTE M IC P RO BL EMS IN MA J OR DEFENSE AC QU ISITION PRO G RAMS PRIOR TO MILESTONE B APPRO V AL. (a) MODIF I CAT IO N TO CER TIFICATION R E QU IRE M ENT. —S ub - section (a) of section 236 6a of title 10,U nited States Code, is amended b y stri k ing ‘ ‘may not receive Milestone A a p proval, or K ey D ecision P oint A approval in the case of a space program, ’ ’ and inserting ‘‘may not receive Milestone A approval, or Key Deci- sion Point A approval in the case of a space program, or otherwise be initiated prior to Milestone B approval, or Key Decision Point B approval in the case of a space program,’’. (b) MODIFICATION TO N OTIFICATION REQUIREMENT.—Subsection (b) of such section is amended— (1) by inserting ‘‘(1)’’ before ‘‘ W ith respect to’’; (2) in paragraph (1), as so designated, by striking ‘‘by at least 2 5 percent,’’ and inserting ‘‘by at least 25 percent, or the program manager determines that the period of time re q uired for the delivery of an initial operational capability is likely to e x ceed the schedule ob j ective established pursuant to section 1 8 1(b)(5) of this title by more than 25 percent,’’; and (3) by adding at the end the following new paragraph ‘‘(2) Not later than 30 days after a program manager submits a notification to the Milestone Decision Authority pursuant to para- graph (1) with respect to a major defense acquisition program, the Milestone Decision Authority shall submit to the congressional defense committees a report that— ‘‘(A) identifies the root causes of the cost or schedule growth in accordance with applicable policies, procedures, and guid- ance; ‘‘(B) identifies appropriate acquisition performance meas- ures for the remainder of the development of the program; and ‘‘(C) includes one of the following: ‘‘(i) A written certification (with a supporting expla- nation) stating that— ‘‘( I ) the program is essential to national security; ‘‘(II) there are no alternatives to the program that will provide acceptable military capability at less cost; ‘‘(III) new estimates of the development cost or schedule, as appropriate, are reasonable; and ‘‘(I V ) the management structure for the program is adequate to manage and control program develop- ment cost and schedule. ‘‘(ii) A plan for terminating the development of the program or withdrawal of Milestone A approval, or Key Decision Point A approval in the case of a space program, if the Milestone Decision Authority determines that such action is in the interest of national defense.’’. (c) A P P L ICATION TO O N G OING PROGRAM S .— (1) IN GENERAL.— E ach major defense acquisition program described in paragraph (2) shall be certified in accordance with the requirements of section 2366a of title 10, United States Certif i ca ti on.D ea dl ine. 10US C 236 6a note. P lan s . Certification. Deadline. R e p orts.


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 123STA T . 1 7 2 4PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9Code(as a m e n ded bythi sse c tion ),w ithin one yea r a f ter the date of the enactment of this A ct . ( 2 )C OVER E DP RO G R AMS . —T he re qu irement in p ara g raph ( 1 ) sha l l apply to any ma j or defense acquisition program that— (A) was initiated before the date of the enactment of this Act and ( B ) as of the date of certification under paragraph (1) has not otherwise been certified pursuant to either section 2 36 6a (as so amended) or 2366b of title 1 0, U nited S tates Code. SEC.205 . AD D IT I ON A LR E QU IRE M ENTS F OR CERTAIN MA J OR DEFENSE ACQUISITION P RO G RAMS. (a) ADD IT IO N A LR E QU IREMENTS RELATING TO M ILESTONE B APPROVAL.—Section 2366b of title 10, United States Code, is amended— (1) in subsection (d)— (A) by inserting ‘ ‘(1) ’ ’ before ‘‘The milestone decision authority may’’; and (B) by stri k ing the second sentence and inserting the following ‘‘(2) W hene v er the milestone decision authority makes such a determination and authori z es such a waiver— ‘‘(A) the waiver, the determination, and the reasons for the determination shall be submitted in writing to the congres - sional defense committees within 30 days after the waiver is authorized; and ‘‘(B) the milestone decision authority shall review the pro- gram not less often than annually to determine the e x tent to which such program currently satisfies the certification components specified in paragraphs (1) and (2) of subsection (a) until such time as the milestone decision authority deter- mines that the program satisfies all such certification compo- nents.’’; (2) by redesignating subsections (e) and (f) as subsections (f) and (g), respectively, and inserting after subsection (d) the following new subsection (e): ‘‘(e) D ESIGNATION O F CERTIFI C ATION STATUS IN BUDGET DOCU- MENTATION.—Any budget request, budget justification material, budget display, reprogramming request, Selected Acquisition Report, or other budget documentation or performance report sub- mitted by the Secretary of Defense to the P resident regarding a major defense acquisition program receiving a waiver pursuant to subsection (d) shall prominently and clearly indicate that such program has not fully satisfied the certification requirements of this section until such time as the milestone decision authority makes the determination that such program has satisfied all such certification components.’’; and (3) in subsection (a)— (A) in paragraph (1), by striking ‘‘and’’ at the end; (B) by redesignating paragraph (2) as paragraph (3); (C) by inserting after paragraph (1) the following new paragraph (2): Det e rmina ti o n .W ai v era u t h orit y . Dea dl ine.


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 123STA T . 1 7 2 5PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (2)hasrec e iv e d a p re l i m i n ar y desi g n revie w and c o nd u c t ed a f ormal post - preliminary design review assessment , and cer- tifies on the b asis of such assessment that the program dem- onstrates a high li k elihood of accomplishing its intended mis- sion and ’ ’; and ( D ) in paragraph ( 3 ), as redesignated by subparagraph ( B ) of this paragraph — (i) in subparagraph (D), by striking the semicolon and inserting ‘‘, as determined by the M ilestone Deci- sion A uthority on the basis of an independent review and assessment by the Director of Defense R esearch and E ngineering; and’’; (ii) by striking subparagraph (E); and (iii) by redesignating subparagraph ( F ) as subpara- graph (E) . (b) CERTIF I CA TI ON AN D RE V IE W OF P RO G RA MS ENTERING DEVE L O P MENT PRIOR TO ENACTMENT OF S ECTION 23 6 6 B OF T ITLE 10 .— (1) DETERMINATION.— N ot later than 2 7 0 days after the date of the enactment of this Act, for each ma j or defense ac q uisition program that received Milestone B approval before J anuary 6, 2006, and has not received Milestone C approval, and for each space program that received K ey Decision Point B approval before January 6, 2006, and has not received Key Decision Point C approval, the Milestone Decision Authority shall determine whether or not such program satisfies all of the certification components specified in paragraphs (1) and (2) of subsection (a) of section 2366b of title 10, U nited States Code (as amended by subsection (a) of this section). (2) ANN U AL REVIEW.—The Milestone Decision Authority shall review any program determined pursuant to paragraph (1) not to satisfy any of the certification components of sub- section (a) of section 2366b of title 10, United States Code (as so amended), not less often than annually thereafter to determine the e x tent to which such program currently satisfies such certification components until such time as the Milestone Decision Authority determines that such program satisfies all such certification components. (3) DESIGNATION OF CERTIFICATION STATUS IN BUDGET DOCUMENTATION.—Any budget request, budget justification material, budget display, reprogramming request, Selected Acquisition Report, or other budget documentation or perform- ance report submitted by the Secretary of Defense to the Presi- dent regarding a major defense acquisition program which the Milestone Decision Authority determines under paragraph (1) does not satisfy all of the certification components of subsection (a) of section 2366b of title 10, United States Code, (as so amended) shall prominently and clearly indicate that such pro- gram has not fully satisfied such certification components until such time as the Milestone Decision Authority makes the deter- mination that such program has satisfied all such certification components. (c) REVIEWS OF PROGRAMS RESTRUCTURED AFTER E X PERIENCING CRITICAL COST G ROWT H .—The official designated to perform over- sight of performance assessment pursuant to section 103 of this Act, shall assess the performance of each major defense acquisition As s e ss m e nt.10USC243 3 a n o te. D ea dli ne. 10 USC 23 6 6 b note.


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 123STA T . 1 7 2 6PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9prog r amth at ha sexc ee d ed cr i tica l cost gro w th thresholds esta b- lished p u rsua n t to section 243 3 ( e ) o f title 10,U nited S tates C ode, but has not been terminated in accordance with section 2433a of such title (as added b y section 20 6 (a) of this A ct) not less often than semi-annually until one year after the date on which such program recei v es a new milestone approval, in accordance with section 2433a(c)(3) of such title (as so added) .T he results of reviews performed under this subsection shall be reported to the Under Secretary of D efense for Ac q uisition, Technology, and L ogistics and summari z ed in the next annual report of such des- ignated official. SEC.206 .C RIT IC AL C O ST G RO W T H I NM A J OR D E F ENSE AC QU ISITION P ROGRAMS. (a) A CTIONSF O L LO W IN G C R ITIC A L COST G ROWT H . — (1) I NG E NERAL.—Chapter 144 of title 10, United States Code, is amended by inserting after section 2433 the following new section

‘ §243 3 a.Crit i c a l c os t g ro w t h i nm a j or def ense ac qu isition p rograms ‘ ‘(a) R EASSESS M ENT O FP ROGRAM.—If the program acquisition unit cost or procurement unit cost of a ma j or defense acquisition program or designated subprogram (as determined by the Secretary under section 2433(d) of this title) increases by a percentage equal to or greater than the critical cost growth threshold for the program or subprogram, the Secretary of Defense, after consultation with the J oint Requirements O versight Council regarding program requirements, shall— ‘‘(1) determine the root cause or causes of the critical cost growth in accordance with applicable statutory requirements and Department of Defense policies, procedures, and guidance and ‘‘(2) in consultation with the Director of Cost Assessment and Program E valuation, carry out an assessment of— ‘‘(A) the projected cost of completing the program if current requirements are not modified; ‘‘( B ) the projected cost of completing the program based on reasonable modification of such requirements; ‘‘(C) the rough order of magnitude of the costs of any reasonable alternative system or capability; and ‘‘(D) the need to reduce funding for other programs due to the growth in cost of the program. ‘‘(b) PRES U M P TION OF TERMINATION.—(1) After conducting the reassessment required by subsection (a) with respect to a major defense acquisition program, the Secretary shall terminate the pro- gram unless the Secretary submits to Congress, before the end of the 60-day period beginning on the day the Selected Acquisition Report containing the information described in section 2433(g) of this title is required to be submitted under section 2432(f) of this title, a written certification in accordance with paragraph (2). ‘‘(2) A certification described by this paragraph with respect to a major defense acquisition program is a written certification that— ‘‘(A) the continuation of the program is essential to the national security; Deadlin e .C e rt i f i c ati o n. Deter m ination. Con su ltations.


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 123STA T . 1 7 27 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (B)ther e a re no a l ternat iv e s to the p ro g ra mw hi c h will provi d e accepta b le capabilit y to meet the j oint military re qu ire - ment (as de f ined in section 18 1(g)((1) of this title) at less cost ‘‘( C ) the new estimates of the program acquisition unit cost or procurement unit cost have been determined by the D irector of Cost A ssessment and P rogram E valuation to be reasonable; ‘‘(D) the program is a higher priority than programs whose funding must be reduced to accommodate the growth in cost of the program; and ‘‘(E) the management structure for the program is adequate to manage and control program acquisition unit cost or procure- ment unit cost . ‘‘( 3 ) A written certification under paragraph ( 2 ) shall be accom- panied by a report presenting the root cause analysis and assess- ment carried out pursuant to subsection (a) and the basis for each determination made in accordance with subparagraphs (A) through (E) of paragraph (2), together with supporting documenta- tion. ‘‘(c) A CTIONS I F P R O G R AMN OT TE RMINATE D . — (1) I f the S ec- retary elects not to terminate a major defense acquisition program pursuant to subsection (b), the Secretary shall— ‘‘(A) restructure the program in a manner that addresses the root cause or causes of the critical cost growth, as identified pursuant to subsection (a), and ensures that the program has an appropriate management structure as set forth in the certifi- cation submitted pursuant to subsection (b)(2)(E); ‘‘(B) rescind the most recent M ilestone approval, or K ey Decision Point approval in the case of a space program, for the program and withdraw any associated certification under section 23 6 6a or 2366b of this title; ‘‘(C) require a new Milestone approval, or Key Decision Point approval in the case of a space program, for the program before ta k ing any contract action to enter a new contract, e x ercise an option under an existing contract, or otherwise extend the scope of an existing contract under the program, except to the extent determined necessary by the Milestone Decision Authority, on a non-delegable basis, to ensure that the program can be restructured as intended by the Secretary without unnecessarily wasting resources; ‘‘(D) include in the report specified in paragraph (2) a description of all funding changes made as a result of the growth in cost of the program, including reductions made in funding for other programs to accommodate such cost growth; and ‘‘(E) conduct regular reviews of the program in accordance with the requirements of section 2 05 of the W eapon Systems Acquisition R eform Act of 200 9 . ‘‘(2) F or purposes of paragraph (1)(D), the report specified in this paragraph is the first Selected Acquisition Report for the pro- gram submitted pursuant to section 2 4 32 of this title after the President submits a budget pursuant to section 1105 of title 31, in the calendar year following the year in which the program was restructured. Reports. Reports.


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 123STA T . 1 7 2 8PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (d)ACTIONS I FPR O G R AMTE RMINATE D.—Ifam a jor d e fe ns e a cqui si t ion p ro g ram is terminated pursuant to su b section (b) , t h e S ecretar y sha l l submit to C ongress a w ritten report setting forth— ‘‘( 1 )ane x planation of the reasons for terminating the pro - gram ‘‘( 2 ) the alternati v es considered to address any problems in the program; and ‘‘( 3 ) the course the D epartment plans to pursue to meet any continuing joint military requirements otherwise intended to be met by the program. ’ ’. (2) C L ERICAL AMENDMENT.—The table of sections at the beginning of chapter 1 4 4 of such title is amended by inserting after the item relating to section 2433 the following new item

‘ 243 3 a.Crit i c a l c os t g ro w t h i nm a j or def ense ac qu isition p rograms. ’ ’. (3) CONFORMING AMENDMENT.—Paragraph (2) of section 2433(e) of such title 1 0 is amended to read as follows: ‘‘(2) If the program acquisition unit cost or procurement unit cost of a major defense acquisition program or designated major subprogram (as determined by the Secretary under subsection (d)) increases by a percentage equal to or greater than the critical cost growth threshold for the program or subprogram, the Secretary of Defense shall ta k e actions consistent with the requirements of section 2433a of this title.’’. (b) TREATMENT AS M DAP.—Section 2430 of such title is amended— (1) in subsection (a)(2), by inserting ‘‘, including all planned increments or spirals,’’ after ‘‘an eventual total expenditure for procurement’’; and (2) by adding at the end the following new subsection: ‘‘(c) F or purposes of subsection (a)(2), the Secretary shall con- sider, as applicable, the following: ‘‘(1) The estimated level of resources required to fulfill the relevant joint military requirement, as determined by the J oint R equirements O versight Council pursuant to section 1 8 1 of this title. ‘‘(2) The cost estimate referred to in section 23 6 6a(a)(4) of this title. ‘‘(3) The cost estimate referred to in section 2366b(a)(1)(C) of this title. ‘‘(4) The cost estimate within a baseline description as required by section 243 5 of this title.’’. SEC.207 . ORGANIZ A T IONA L CON F LICTS OF INTEREST IN M A J OR D EFENSE AC QU ISITION P ROGRAMS. (a) RE V ISED REG U LATIONS RE Q UIRED.— N ot later than 2 7 0 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Defense Supplement to the Federal Acquisition Regulation to provide uniform guidance and tighten existing requirements for organi z ational conflicts of interest by contractors in major defense acquisition programs. (b) E LEMENTS.—The revised regulations required by subsection (a) shall, at a minimum— (1) address organizational conflicts of interest that could arise as a result of— (A) lead system integrator contracts on major defense acquisition programs and contracts that follow lead system Deadlin e .10USC243 0 n ot e. R e p o r t s.


text: Dictionary of National Biography, 1885-1900/Montresor, John


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 123STA T . 1 7 2 9PUBLIC LA W 111 – 23 —M A Y 22, 2 0 09 integra t o r c ontract s ons u c hp rogra m s , particu l arl y con - tracts f or pro d uction the o w nership of b usiness units performing systems engineering and technical assistance functions, professional ser v ices, or management support services in relation to ma j or defense ac q uisition programs by contractors who simultaneously own business units competing to perform as either the prime contractor or the supplier of a major subsystem or component for such programs; ( C ) the award of major subsystem contracts by a prime contractor for a major defense acquisition program to busi- ness units or other affiliates of the same parent corporate entity, and particularly the award of subcontracts for soft- ware integration or the development of a proprietary soft- ware system architecture; or ( D ) the performance by, or assistance of, contractors in technical evaluations on major defense acquisition pro- grams; ( 2 ) ensure that the Department of Defense receives advice on systems architecture and systems engineering matters with respect to major defense acquisition programs from federally funded research and development centers or other sources inde- pendent of the prime contractor; ( 3 ) require that a contract for the performance of systems engineering and technical assistance functions for a major defense acquisition program contains a provision prohibiting the contractor or any affiliate of the contractor from partici- pating as a prime contractor or a major subcontractor in the development or construction of a weapon system under the program; and ( 4 ) establish such limited e x ceptions to the requirement in paragraphs (2) and (3) as may be necessary to ensure that the Department of Defense has continued access to advice on systems architecture and systems engineering matters from highly-qualified contractors with domain experience and exper- tise, while ensuring that such advice comes from sources that are objective and unbiased . (c) C ONSULTA T I ON IN REV ISION O F RE G ULATIONS. — ( 1 )RE C O M MEN D ATIONS OF P ANEL ON CONT R ACTING INTEG- RIT Y .— N ot later than 90 days after the date of the enactment of this A ct, the P anel on Contracting I ntegrity established pursuant to section 8 13 of the J ohn W arner National Defense Authori z ation Act for F iscal Y ear 200 7 (Public L aw 109 – 3 6 4; 120 S tat. 2320) shall present recommendations to the Secretary of Defense on measures to eliminate or mitigate organizational conflicts of interest in major defense acquisition programs. (2) CONSIDERATION OF RECOMMENDATIONS.—In developing the revised regulations required by subsection (a), the Secretary shall consider the following (A) T he recommendations presented by the Panel on Contracting Integrity pursuant to paragraph (1). (B) Any findings and recommendations of the Adminis- trator for Federal Procurement Policy and the Director of the O ffice of G overnment E thics pursuant to section 841(b) of the Duncan H unter National Defense Authoriza- tion Act for Fiscal Year 2009 (Public Law 110–417; 122 Stat. 4 5 39). Deadlin e .
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 123STA T . 1 7 3 0PUBLIC LA W 111 – 23 —M A Y 22, 200 9(d)EXTENSIO NO FPA NE L ON C ONT R A C TIN GI NTEGRIT Y.—Sub-section (e) o f section 813 oft h e J ohn War ner N ationa lD efense A uthori z ation Act for F iscal Y ear 20 0 7 isa m ended to read as follo w s

‘(e) T ER M INATION.— ‘‘(1) IN GENERAL.—Sub j ect to p ara g raph (2) , the panel shall continue to ser v e until the date that is 18 months after the date on which the Secretar y of Defense notifies the congres- sional defense committees of an intention to terminate the panel based on a determination that the activities of the panel no longer justify its continuation and that concerns about con- tracting integrity have been mitigated. ‘‘(2) M INIM U M CONTINUING SER V ICE.—The panel shall con- tinue to serve at least until December 31, 2011. ’ ’. TI T LE III —AD DITI ON ALA CQU I S ITION PR O V ISIONS SEC.301 . AW A RD S FO RDE P AR TM E N T OF DEFENSE PERSONNE L FOR E X CELLENCE I NT H EAC QU ISITION OF PRODUCTS AND SER V ICES. (a) IN G ENERAL.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall commence carrying out a program to recognize e x cellent performance by individuals and teams of members of the Armed Forces and civilian personnel of the Department of Defense in the ac q uisition of prod- ucts and services for the Department of Defense. (b) ELEMENTS.—The program required by subsection (a) shall include the following: (1) Procedures for the nomination by the personnel of the military departments and the Defense Agencies of individuals and teams of members of the Armed Forces and civilian per- sonnel of the Department of Defense for eligibility for recogni- tion under the program. (2) Procedures for the evaluation of nominations for recogni- tion under the program by one or more panels of individuals from the Government, academia, and the private sector who have such expertise, and are appointed in such manner, as the Secretary shall establish for purposes of the program. (c) A W AR D OF CAS HB ONUSES.—As part of the program required by subsection (a), the Secretary may award to any individual recog- nized pursuant to the program a cash bonus authorized by any other provision of law to the extent that the performance of such individual so recognized warrants the award of such bonus under such provision of law. SEC. 30 2 . EARNED VALUE MANA G EMENT. (a) MODIFICATION OF ELEMENTS IN R E P ORT ON IMPLEMENTA- TION.—Subsection (a) of section 887 of the Duncan H unter National Defense Authorization Act for Fiscal Year 200 9 (Public L aw 110 –4 17 122 Stat. 4 56 2) is amended by stri k ing paragraph (7) and inserting the following new paragraphs: ‘‘(7) A discussion of the methodology used to establish appropriate baselines for earned value management at the award of a contract or commencement of a program, whichever is earlier. Procedu re s.D e a d lin e. 10USC23 02 no t e. N oti f ication. 10 USC 230 4 note.


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 123STA T . 1 7 31 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9‘ ‘ (8)Adiscu ssi on o fthema nne r in w hich the D e p artment ensures that personne l responsi b le for administerin g and o v er - seeing earned value management s y stems have the training and q ualifications needed to perform that responsibility . ‘‘( 9 ) A discussion of mechanisms to ensure that contractors establish and use approved earned value management systems , including mechanisms such as the consideration of the quality of contractor earned value management performance in past performance evaluations. ‘‘( 10 ) R ecommendations for improving earned value management and its implementation within the Department, including — ‘‘(A) a discussion of the merits of possible alternatives and ‘‘( B ) a plan for implementing any improvements the S ecretary determines to be appropriate. ’ ’. (b) MODIF I CAT IO N OFR EP O R T DATE.—Subsection (b) of such section is amended by stri k ing ‘‘ 27 0 days after the date of the enactment of this Act’’ and inserting ‘‘ O ctober 1 4, 2009’’. SEC.30 3.E XPAN S IO NO F NA T IONA L SEC UR IT Y O BJ ECTI V ESOFT H E NATIONAL TECHNOLO G YAN D INDUSTRIAL BASE. (a) I N G ENERA L .—Section 2 5 01(a) of title 10, U nited States C ode, is amended by adding at the end the following new paragraph ‘‘( 6 ) Maintaining critical design skills to ensure that the armed forces are provided with systems capable of ensuring technological superiority over potential adversaries.’’. (b) A S SESS M ENT OF E FFECT OF T ERMINATION OF MA J OR DEFENSE AC QU ISITION P RO G RAMS ON TEC H NOLOG Y AND INDUSTRIAL CAPA B ILITIES.—Section 2505(b) of such title is amended— (1) in paragraph (2), by striking ‘‘and’’ at the end; (2) in paragraph ( 3 ), by striking the period at the end and inserting ‘‘; and’’; and (3) by adding at the end the following new paragraph: ‘‘(4) consider the effects of the termination of ma j or defense acquisition programs (as the term is defined in section 2430 of this title) in the previous fiscal year on the sectors and capabilities in the assessment.’’. SEC. 30 4 .CO M PTROLLER GENERAL OF THE UNITED STATES REPORTS ON COSTS AND FINANCIAL INFORMATION REGARDING MAJOR DEFENSE AC Q UISITION PROGRAMS. (a) RE V IE W OF OPERATING AND SUPPORT COSTS OF MAJOR W EAPON SYSTEMS.— (1) IN GENERAL.— N ot later than one year after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the congressional defense commit- tees a report on growth in operating and support costs for major weapon systems. (2) ELEMENTS.—In preparing the report required by para- graph (1), the Comptroller General shall, at a minimum— (A) identify the original estimates for operating and support costs for major weapon systems selected by the Comptroller General for purposes of the report; (B) assess the actual operating and support costs for such major weapon systems; (C) analy z e the rate of growth for operating and sup- port costs for such major weapon systems;


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 123STA T . 1 7 32 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9(D)forsuchmaj or we a p o n s y s t ems that ha v ee x per i- ence d the hi g hest rate of growth in operating and support costs , assess the factors contri b uting to such growth ( E ) assess measures ta k en by the Department of Defense to reduce operating and support costs for major weapon systems; and ( F ) make such recommendations as the C omptro l ler G eneral considers appropriate . (b) REVI E WOF FI NA N C IA LI NFO RM A T ION RELATIN G TO M A J OR DEFEN S E A C QU ISITION P ROGRAMS. — ( 1 ) REVIEW.— T he Comptroller General of the U nited S tates shall perform a review of weaknesses in operations affecting the reliability of financial information on the systems and assets tobeac q uired under major defense acquisition programs. ( 2 ) ELEMENTS.—The review required under paragraph (1) shall— (A) identify any weaknesses in operations under major defense acquisition programs that hinder the capacity to assemble reliable financial information on the systems and assets to be acquired under such programs in accordance with applicable accounting standards; ( B ) identify any mechanisms developed by the Depart- ment of Defense to address weaknesses in operations under major defense acquisition programs identified pursuant to subparagraph (A); and (C) assess the implementation of the mechanisms set forth pursuant to subparagraph (B), including— (i) the actions taken, or planned to be taken, to implement such mechanisms; (ii) the schedule for carrying out such mechanisms; and (iii) the metrics, if any, instituted to assess progress in carrying out such mechanisms. ( 3 ) CONSULTATION.—In performing the review required by paragraph (1), the Comptroller General shall seek and consider input from each of the following (A) The Chief Management O fficer of the Department of Defense. (B) The Chief Management Officer of the Department of the Army. (C) The Chief Management Officer of the Department of the N avy. (D) The Chief Management Officer of the Department of the Air Force. ( 4 )RE P ORT.—Not later than one year after the date of enactment of this Act, the Comptroller General shall submit


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 123STA T . 1 7 33 PUBLIC LA W 111 – 23 —M A Y 22, 2 0 0 9LEGIS L AT I V E H IST ORY— S .45 4 ( H.R. 210 1 ): HO U SE RE P ORTS: Nos . 111 – 101 ( C o m m.o n A r m ed Ser vic es) a nd 111–124 (Comm. o f Conference) accom p an y in g H.R. 2101. CONGRESSIONAL RECOR D, Vo l . 155 (200 9 ): M ay 6 , 7, considered and passed Sena t e. May 1 3, considered and passed Ho u se, amended, in lieu of H.R. 2101 pursu - ant to H. Res. 432. May 20, Senate agreed to conference report. May 21, House agreed to conference report. DAILY COMPILATION O F PRESIDENTIAL DOCUMENTS (2009): May 22, Presidential remar k s. to t hec o ngr e s s i on ald e f ense co m mittees a re p ort on the res u lts of the re v ie w re q uired by paragraph (1).A pproved M ay 2 2, 2 0 0 9.


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 123STA T . 1 7 3 4PUBLIC LA W 111 – 24 —M A Y 22, 2 0 0 9PublicLaw1 11 –24 111 thCongres s A n Act Toamendth eT ru th i n L endin gAc ttoe s ta bl ish f air and trans p arent practices relating to the e x tension of credit under an open end consumer credit plan , and for other purposes .Beit e nac te dby t h e S enate and Hous eo fR e pr esentati v es of the U nited States of Am erica in C on g ress assemb l ed ,SECTION1. S H O R T TIT L E T AB LEO F CONTENTS. (a)SHORTTI T LE.— T hisActm a ybe cite d as the ‘ ‘ Cr edit Card Acc oun tabi l ity R es p onsibility and D isclosure Act o f20 0 9’ ’orthe ‘‘Credit CARD Act of 2009’’. (b) T AB LEO F CO N TENT S .— The table of contents for this Act is as follo w s
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ec. 1 . Short title table of contents. Sec. 2 . R egulator y authority. Sec. 3 . E ffecti v e date. T I TLE I —CON S UM ER P ROTECTION Sec. 1 0 1. Protection of credit cardholders. Sec. 102. Limits on fees and interest charges. Sec. 103. Use of terms clarified. Sec. 10 4 . Application of card payments. Sec. 10 5 . Standards applicable to initial issuance of subprime or ‘ ‘fee harvester ’ ’ cards. Sec. 10 6 . Rules regarding periodic statements. Sec. 10 7 . Enhanced penalties. Sec. 10 8 . Clerical amendments. Sec. 10 9 . Consideration of Ability to repay. TITLE II—EN H ANCE D CONSUMER DISCLOSURES Sec. 201. Payoff timing disclosures. Sec. 202. Re q uirements relating to late payment deadlines and penalties. Sec. 203. Rene w al disclosures. Sec. 204. Internet posting of credit card agreements. Sec. 205. Prevention of deceptive mar k eting of credit reports. TITLE III—PROTECTION O FY OUN G CONSUMERS Sec. 301. Extensions of credit to underage consumers. Sec. 302. Protection of young consumers from prescreened credit offers. Sec. 303. Issuance of credit cards to certain college students. Sec. 304. Privacy Protections for college students. Sec. 305. College Credit Card Agreements. TITLE I V —GIFT CARDS Sec. 401. General - use prepaid cards, gift certificates, and store gift cards. Sec. 402. Relation to State laws. Sec. 403. Effective date. TITLE V—MISCELLANEOUS PROVISIONS Sec. 501. Study and report on interchange fees. Sec. 502. B oard review of consumer credit plans and regulations. 15USC 1 60 1 note. C r e di tC a rd Ac co u nta b i l it yR e sp onsibility and D isclosure Act o f2 00 9 . M ay 22 , 2009 [H .R. 62 7]


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 123STA T . 1 7 3 5PUBLIC LA W 111 – 2 4—M A Y 22, 2 0 0 9Sec.503 . S tor e dvalu e. Sec. 50 4P rocedure f ort im el ys ettleme n t of estates of decedent o b li g ors. Sec. 505. R e p ort to C ongress on reductions of consumer credit card limits based on certain information as to e x perience or transactions of t h e consumer. Sec. 50 6 . B oard revie w of small business credit plans and recommendations. Sec. 50 7 . Small business information security tas k force. Sec. 50 8 . Study and report on emergency pin technology. Sec. 50 9 . Study and report on the marketing of products with credit offers. Sec. 5 1 0. F inancial and economic literacy. Sec. 511. Federal trade commission rulemaking on mortgage lending. Sec. 51 2 . Protecting A mericans from violent crime. Sec. 513. G A O study and report on fluency in the E nglish language and financial literacy. SEC.2 . R E GULATO R Y AUT H OR I TY. TheBoard o fG o v er n or s of t he F edera lR eserve Sy ste m(i n this Ac t referred to as the ‘ ‘Board ’ ’ ) may iss u e such rules and p u b lish such model forms as it considers necessary to carry out this Act and the amendments made by this Act . SEC. 3 .E F FECTI V E D ATE. This Act and the amendments made by this Act shall become effective 9 months after the date of enactment of this Act , e x cept as other w ise specifically provided in this Act. TI T LE I —CONSUM E RP ROTECTION SEC. 10 1. P ROTECTIO N OF CREDIT CARDHOLDERS. (a) A DVANCENOTI CEO F RATE I NC R EA S E AND O T H ER C HAN G ES RE QU IRED. — ( 1 )A M ENDMENT TO TI L A.—Section 1 27 of the Truth in L endin g Act (1 5U .S.C. 1 63 7) is amended by adding at the end the following ‘‘(i) ADVANCE NOTICE OF RATE INCREASE AND OTHER CHANGES REQUIRED.— ‘‘(1) ADVANCE NOTICE OF INCREASE IN INTEREST RATE REQUIRED.—In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a writ - ten notice of an increase in an annual percentage rate (except in the case of an increase described in paragraph (1), (2), or (3) of section 171(b)) not later than 4 5 days prior to the effective date of the increase. ‘‘(2) ADVANCE NOTICE OF OTHER SIGNIFICANT CHANGES REQUIRED.—In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a writ- ten notice of any significant change, as determined by rule of the Board, in the terms (including an increase in any fee or finance charge, other than as provided in paragraph (1)) of the cardholder agreement between the creditor and the obligor, not later than 45 days prior to the effective date of the change. ‘‘(3) NOTICE OF RIGHT TO CANCEL.— E ach notice re q uired by paragraph (1) or (2) shall be made in a clear and conspicuous manner, and shall contain a brief statement of the right of the obligor to cancel the account pursuant to rules established by the Board before the effective date of the sub j ect rate increase or other change. ‘‘(4) RULE OF CONSTRUCTION.—Closure or cancellation of an account by the obligor shall not constitute a default under Deadlin e . Deadline. 15USC 1 602 n ot e. 15 USC 1602 note.


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 123STA T . 1 7 3 6PUBLIC LA W 111 – 2 4—M A Y 22, 2 0 0 9anexist in gc a rdhol der agree m ent , and shall not trigger an o b ligation to immediatel y re p ay the obligation in fu ll or through a method that is less beneficial to the obligor than one of the methods described in section 17 1 ( c ) ( 2 ), or the imposition of any other penalty or fee .’ ’. (2) EF F ECTIV E DA TE. —N ot w ithstanding section 3, section 127(i) of the T ruth in L ending A ct, as added by this subsection, shall become effecti v e 90 days after the date of enactment of this Act. (b) R ET RO ACTIVE IN CREA S E AND U NIVERSA LD EFA U LT P RO H I B- ITED.— C hapter 4 of the Truth in Lending Act (1 5 U. S .C. 1 6 66 et se q .) is amended— (1) by redesignating section 171 as section 173 and (2) by inserting after section 170 the following

‘ SEC.17 1. LIM I T S ON INTE R EST R A TE ,F EE, AN D FINANCE C H AR G E INCREASES A P PLICA B LETOO U TSTANDING BALANCES. ‘ ‘(a) IN G ENERAL.—In the case of any credit card account under an open end consumer credit plan, no creditor may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance, except as permitted under subsection (b). ‘‘(b) E X CE P TIONS.—The prohibition under subsection (a) shall not apply to— ‘‘(1) an increase in an annual percentage rate upon the expiration of a specified period of time, provided that— ‘‘(A) prior to commencement of that period, the creditor disclosed to the consumer, in a clear and conspicuous manner, the length of the period and the annual percentage rate that would apply after expiration of the period; ‘‘( B ) the increased annual percentage rate does not exceed the rate disclosed pursuant to subparagraph (A); and ‘‘(C) the increased annual percentage rate is not applied to transactions that occurred prior to commencement of the period; ‘‘(2) an increase in a variable annual percentage rate in accordance with a credit card agreement that provides for changes in the rate according to operation of an index that is not under the control of the creditor and is available to the general public; ‘‘(3) an increase due to the completion of a wor k out or temporary hardship arrangement by the obligor or the failure of the obligor to comply with the terms of a workout or tem- porary hardship arrangement, provided that— ‘‘(A) the annual percentage rate, fee, or finance charge applicable to a category of transactions following any such increase does not exceed the rate, fee, or finance charge that applied to that category of transactions prior to commencement of the arrangement; and ‘‘(B) the creditor has provided the obligor, prior to the commencement of such arrangement, with clear and conspicuous disclosure of the terms of the arrangement (including any increases due to such completion or failure); or ‘‘(4) an increase due solely to the fact that a minimum payment by the obligor has not been received by the creditor Deadlin e s.15USC 1 6 66i – 1. 15 USC 1666 j . 15 USC 16 37 n ot e.


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 123STA T . 1 7 37 PUBLIC LA W 111 – 2 4—M A Y 22, 2 0 0 9with i n60days a f t er the d u edatef o rsu c h p ay m ent , pro v ided that the creditor sha l l —‘ ‘ (A) include, to g ether with the notice of such increase re q uired under section 127 (i), a clear and conspicuous writ - ten statement of the reason for the increase and that the increase will terminate not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time from the o b ligor during that period and ‘‘( B ) terminate such increase not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time during that period . ‘‘(c) REPAYM E NTOFOU T S TAN DI N G BA L AN C E.— ‘‘(1) I N GENE R AL.— T he creditor shall not change the terms governing the repayment of any outstanding balance, e x cept that the creditor may provide the obligor with one of the methods described in paragraph (2) of repaying any outstanding balance, or a method that is no less beneficial to the obligor than one of those methods. ‘‘(2) M ET H ODS.—The methods described in this paragraph are— ‘‘(A) an amorti z ation period of not less than 5 years, beginning on the effective date of the increase set forth in the notice required under section 127(i); or ‘‘(B) a required minimum periodic payment that includes a percentage of the outstanding balance that is equal to not more than twice the percentage required before the effective date of the increase set forth in the notice required under section 127(i). ‘‘(d) OUTSTANDING BALANCE D EFINED.— F or purposes of this section, the term ‘outstanding balance ’ means the amount owed on a credit card account under an open end consumer credit plan asoftheendofthe1 4 th day after the date on which the creditor provides notice of an increase in the annual percentage rate, fee, or finance charge in accordance with section 127(i).’’. (c) INTEREST RATE REDUCTION ON OPEN E ND C ONSUMER CREDIT P LANS.—Chapter 3 of the Truth in L ending Act (15 U . S .C. 1661 et seq.) is amended by adding at the end the following

‘ SEC.148 . INT E R EST R A TE RE DU CTI O NONO P EN END CONSU M ER CREDIT P L ANS. ‘‘(a) IN G ENERAL.—If a creditor increases the annual percentage rate applicable to a credit card account under an open end consumer credit plan, based on factors including the credit ris k of the obligor, market conditions, or other factors, the creditor shall consider changes in such factors in subsequently determining whether to reduce the annual percentage rate for such obligor. ‘‘(b) RE Q UIREMENTS.— W ith respect to any credit card account under an open end consumer credit plan, the creditor shall— ‘‘(1) maintain reasonable methodologies for assessing the factors described in subsection (a); ‘‘(2) not less frequently than once every 6 months, review accounts as to which the annual percentage rate has been increased since J anuary 1, 200 9, to assess whether such factors have changed (including whether any risk has declined); Deadlin e s.R e v ie w. 15USC 1 6 65 c.


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 123STA T . 1 7 3 8PUBLIC LA W 111 – 2 4—M A Y 22, 2 0 0 9‘ ‘ (3)reduc e th e an nua lp ercenta g e rate pre vio u s l y increased w hen a reduction is indicated b y the review and ‘‘( 4 )intheevento f an increase in the annual percentage rate , provide in the written notice re q uired under section 127 (i) a state m ent of the reasons for the increase . ‘‘(c) RULEOFC O NSTR U C T I ON. —T his section shall not be con - strued to require a reduction in any specific amount. ‘‘(d) RULE MAK IN G .—The B oard shall issue final rules not later than 9 months after the date of enactment of this section to imple- ment the requirements of and evaluate compliance with this section, and subsections (a), (b), and (c) shall become effective 1 5 months after that date of enactment. ’ ’. (d) I NTRO D UCTOR Y AND P ROMOTIONAL RATES.—Chapter 4 of the Truth in L ending A ct (15 U . S .C. 1 6 66 et seq.) is amended by inserting after section 171, as amended by this Act, the following

‘ SEC.172 . AD D IT I ON A L LI M ITS ON INTE R EST RATE INCREASES. ‘‘(a) LIMITATION ON INCREASES W IT H IN F IRST Y EAR.— Ex cept in the case of an increase described in paragraph (1), (2), (3), or (4) of section 171(b), no increase in any annual percentage rate, fee, or finance charge on any credit card account under an open end consumer credit plan shall be effective before the end of the 1-year period beginning on the date on which the account is opened. ‘‘(b) PROMOTIONAL RATE M INIMUM TERM.— N o increase in any annual percentage rate applicable to a credit card account under an open end consumer credit plan that is a promotional rate (as that term is defined by the Board) shall be effective before the end of the 6-month period beginning on the date on which the promotional rate ta k es effect, sub j ect to such reasonable exceptions as the Board may establish, by rule.’’. (e) CLERICAL AMENDMENT.—The table of sections for chapter 4 of the Truth in Lending Act is amended by striking the item relating to section 171 and inserting the following: ‘ ‘ 17 1 .Lim i tson int er est r a te ,f ee, an d finan c ec h ar g e increases a p p l ica b letoo u t - standing balances. ‘‘17 2 . A dditional limits on interest rate increases. ‘‘17 3 . Applicabilit y of S tate la w s. ’ ’. SEC. 1 0 2. LIMITS ON F EES AND INTEREST C H AR G ES. (a) IN G ENERAL.—Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by adding at the end the following: ‘‘(j) PROHI B ITION ON PENALTIES FOR O N-TIME PAYMENTS.— ‘‘(1) PROHIBITION ON DOUBLE-CYCLE BILLING AND P ENALTIES FOR ON-TIME PAYMENTS.—Except as provided in paragraph (2), a creditor may not impose any finance charge on a credit card account under an open end consumer credit plan as a result of the loss of any time period provided by the creditor within which the obligor may repay any portion of the credit extended without incurring a finance charge, with respect to— ‘‘(A) any balances for days in billing cycles that precede the most recent billing cycle; or ‘‘(B) any balances or portions thereof in the current billing cycle that were repaid within such time period. ‘‘(2) E X CEPTIONS.—Paragraph (1) does not apply to— ‘‘(A) any adjustment to a finance charge as a result of the resolution of a dispute; or Timep e r i ods.15USC 1 6 66i –2 . D e a d l i n e. Ef fe ct i v e date.


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 123STA T . 1 7 3 9PUBLIC LA W 111 – 2 4—M A Y 22, 2 0 09 ‘ ‘ (B)any a djustme ntt o a fi nan c ec h a rg easaresu l t of the return of a p ayment for insufficient funds . ‘‘( k ) OPT-INREQU I R E DFO RO V ER-T H E- L I M IT T R A N S A C TIONS IF F EES A RE I MPOSED. — ‘‘( 1 )IN G ENERA L .—In the case of any credit card account under an open end consumer credit plan under w hich an o v er- the-limit fee may b e imposed by the creditor for any e x tension of credit in excess of the amount of credit authori z edtobe extended under such account , no such fee shall be charged, unless the consumer has expressly elected to permit the cred- itor, with respect to such account, to complete transactions involving the extension of credit under such account in excess of the amount of credit authorized. ‘‘( 2 ) D ISCLOSURE BY CREDITOR.— N o election by a consumer under paragraph (1) shall take effect unless the consumer, before making such election, received a notice from the creditor of any over-the-limit fee in the form and manner, and at the time, determined by the Board. If the consumer makes the election referred to in paragraph (1), the creditor shall provide notice to the consumer of the right to revoke the election, in the form prescribed by the Board, in any periodic statement that includes notice of the imposition of an over-the-limit fee during the period covered by the statement. ‘‘( 3 ) FORM OF ELECTION.—A consumer may make or revoke the election referred to in paragraph (1) orally, electronically, or in writing, pursuant to regulations prescribed by the Board. The Board shall prescribe regulations to ensure that the same options are available for both making and revoking such elec- tion. ‘‘( 4 ) TIME OF ELECTION.—A consumer may make the election referred to in paragraph (1) at any time, and such election shall be effective until the election is revoked in the manner prescribed under paragraph (3). ‘‘( 5 ) REGULATIONS.—The Board shall prescribe regula- tions— ‘‘(A) governing disclosures under this subsection and ‘‘(B) that prevent unfair or deceptive acts or practices in connection with the manipulation of credit limits designed to increase over-the-limit fees or other penalty fees. ‘‘( 6 ) RULE OF CONSTRUCTION.—Nothing in this subsection shall be construed to prohibit a creditor from completing an over-the-limit transaction, provided that a consumer who has not made a valid election under paragraph (1) is not charged an over-the-limit fee for such transaction. ‘‘( 7 ) RESTRICTION ON FEES CHARGED FOR AN OVER-THE-LIMIT TRANSACTION.— W ith respect to a credit card account under an open end consumer credit plan, an over-the-limit fee may be imposed only once during a billing cycle if the credit limit on the account is exceeded, and an over-the-limit fee, with respect to such excess credit, may be imposed only once in each of the 2 subse q uent billing cycles, unless the consumer has obtained an additional extension of credit in excess of such credit limit during any such subsequent cycle or the consumer reduces the outstanding balance below the credit limit as of the end of such billing cycle. Regulations.N oti c e.


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 123STA T . 1 740PUBLIC LA W 111 – 24 —M A Y 22, 200 9‘ ‘ (l)LIM I TONFE E SR E LA TE D TO M ET H ODO FP A Y MENT .—Withresp e c tt oa cre d it card acco un t under an open end consu m er credit plan , the creditor ma y not impose a separate f ee to allo w the o b li g ortorepayane x tension of credit or finance charge, whether such repayment is made by mail, electronic transfer, telephone authori z ation, or other means, unless such payment in v olves an expedited service by a service representative of the creditor. ’ ’. (b) REASONA B LE PENALTY FEES.— ( 1 ) I N G ENE R AL.— C hapter 3 of the T ruth in Lending A ct (1 5U . S .C. 1 6 61etse q .), as amended by this Act, is amended by adding at the end the following

‘ SEC.149 . R E A S ON A BL E P ENAL TYF EES ON OPEN EN D CONS UM ER CRED I T PLANS. ‘‘(a) IN G ENERAL.—The amount of any penalty fee or charge that a card issuer may impose with respect to a credit card account under an open end consumer credit plan in connection with any omission with respect to, or violation of, the cardholder agreement, including any late payment fee, over - the-limit fee, or any other penalty fee or charge, shall be reasonable and proportional to such omission or violation. ‘‘(b) R U LEMA K ING RE Q UIRED.—The B oard, in consultation with the Comptroller of the Currency, the Board of D irectors of the Federal Deposit Insurance Corporation, the Director of the O ffice of Thrift Supervision, and the N ational Credit Union Administration Board, shall issue final rules not later than 9 months after the date of enactment of this section, to establish standards for assessing whether the amount of any penalty fee or charge described under subsection (a) is reasonable and proportional to the omission or violation to which the fee or charge relates. Subsection (a) shall become effective 15 months after the date of enactment of this section. ‘‘(c) CONSIDERATIONS.—In issuing rules required by this section, the Board shall consider— ‘‘(1) the cost incurred by the creditor from such omission or violation ‘‘( 2 ) the deterrence of such omission or violation by the cardholder; ‘‘(3) the conduct of the cardholder; and ‘‘( 4 ) such other factors as the Board may deem necessary or appropriate. ‘‘(d) DIFFERENTIATION PERMITTED.—In issuing rules required by this subsection, the Board may establish different standards for different types of fees and charges, as appropriate. ‘‘(e) SAFE H ARBOR RULE AUTHORI Z ED.—The Board, in consulta- tion with the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, may issue rules to provide an amount for any penalty fee or charge described under subsection (a) that is presumed to be reasonable and proportional to the omission or violation to which the fee or charge relates.’’. (2) CLERI C AL AMENDMENTS.—Chapter 3 of the Truth in Lending Act (15 U.S.C. 1661 et seq.) is amended— (A) in the chapter heading, by inserting ‘‘ ANDLIM I TSO N CRE DIT CARD F EES’’ after ‘‘AD V ERTISIN G ’’; and Ef f ectiv e da te .D ead l i n e. 15USC 1 6 65d.


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 123STA T . 1 74 1 PUBLIC LA W 111 – 24 —M A Y 22, 2 0 0 9(B)inthe t abl e ofs e c tions fo r the cha p ter , b y a d din g at the end the follo w ing

‘ 148.Inter e s tr a te re duc t io nono p en end consu m er credit p l ans. ‘‘14 9 . R easona b le penalt yf ees on open end consumer credit plans. ’ ’. SEC.103 . U SE OFT E RM SC LA R I FIE D . S ection 127 of the T r u th in L ending A ct (1 5U. S. C . 1 63 7) isa m ended by adding at the end the following: ‘ ‘(m) U SEOF TE RM ‘ FIX E DRAT E ’ . —W ith respect to the terms of any credit card account under an open end consumer credit plan, the term ‘fi x ed’, when appearing in con j unction with a ref - erence to the annual percentage rate or interest rate applicable with respect to such account, may only be used to refer to an annual percentage rate or interest rate that will not change or v ary for any reason over the period specified clearly and conspicu- ously in the terms of the account.’’. SEC. 10 4 .A P PLICATIO N OF CARD PA Y MENTS. Section 16 4 of the Truth in Lending Act (15 U.S.C. 1666c) is amended— (1) by stri k ing the section heading and all that follows through ‘‘ P ayments’’ and inserting the following: ‘ ‘ §164.Promptandf a i r c r e ditin g of pa y ment s ‘‘(a) ING ENERA L .—Payments’’ (2) by inserting ‘‘, by 5: 0 0 p.m. on the date on which such payment is due,’’ after ‘‘in readily identifiable form’’; (3) by striking ‘‘manner, location, and time’’ and inserting ‘‘manner, and location’’; and (4) by adding at the end the following: ‘‘(b) A P PLI C ATION OF PA Y MENTS.— ‘‘(1) IN G ENERAL.—Upon receipt of a payment from a card- holder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted. ‘‘(2) CLARIFICATION RELATING TO CERTAIN DEFERRED INTEREST ARRANGEMENTS.—A creditor shall allocate the entire amount paid by the consumer in excess of the minimum pay- ment amount to a balance on which interest is deferred during the last 2 billing cycles immediately preceding the expiration of the period during which interest is deferred. ‘‘(c) C H ANGES B Y CARD ISS U ER.—If a card issuer makes a mate- rial change in the mailing address, office, or procedures for handling cardholder payments, and such change causes a material delay in the crediting of a cardholder payment made during the 60- day period following the date on which such change took effect, the card issuer may not impose any late fee or finance charge for a late payment on the credit card account to which such payment was credited.’’. SEC. 10 5 . STANDARDS APPLICA B LE TO INITIAL ISSUANCE OF SUBPRIME OR ‘ ‘FEE H AR V ESTER ’ ’ CARDS. Section 127 of the Truth in Lending Act (15 U.S.C. 1637), as amended by this Act, is amended by adding at the end the following new subsection: