[Senate Report 115-165]
[From the U.S. Government Publishing Office]
Calendar No. 234
115th Congress } { Report
SENATE
1st Session } { 115-165
_______________________________________________________________________
REDUCING DHS ACQUISITION COST GROWTH ACT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 906
TO AMEND THE HOMELAND SECURITY ACT OF 2002 TO
PROVIDE FOR CONGRESSIONAL NOTIFICATION REGARDING MAJOR ACQUISITION
PROGRAM BREACHES, AND FOR OTHER PURPOSES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
October 5, 2017.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
79-010 WASHINGTON : 2017
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Michelle D. Woods, U.S. Government Accountability Office Detailee
Margaret E. Daum, Minority Staff Director
Stacia M. Cardille, Minority Chief Counsel
Charles A. Moskowitz, Minority Senior Legislative Counsel
Thomas J.R. Richards, Minority Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 234
115th Congress } { Report
SENATE
1st Session } { 115-165
======================================================================
REDUCING DHS ACQUISITION COST GROWTH ACT
_______
October 5, 2017.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 906]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 906) to amend the
Homeland Security Act of 2002 to provide for congressional
notification regarding major acquisition program breaches, and
for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................4
V. Evaluation of Regulatory Impact..................................5
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............6
I. Purpose and Summary
S. 906, the Reducing DHS Acquisition Cost Growth Act,
amends the Homeland Security Act of 2002 to provide for greater
oversight of major acquisition programs within the Department
of Homeland Security (DHS or the Department) that fail to meet
cost, schedule, or performance requirements (i.e., breach). The
bill assists DHS in its efforts to improve management of its
major acquisition programs by ensuring that breaches are
reported in a timely manner to the appropriate Department
officials. Additionally, S. 906 requires DHS to develop a
remediation plan and perform a root cause analysis for each
major acquisition program in breach. Finally, this bill
requires the DHS Office of Inspector General (OIG) to conduct a
comprehensive study on the prevalence and impact of bid
protests on the DHS acquisition process, particularly those
protests filed with the Government Accountability Office (GAO)
and the U.S. Court of Federal Claims.
II. Background and the Need for Legislation
DHS spends approximately $18 billion annually on its
acquisition programs.\1\ From the screening of passengers at
our nation's airports to the detection of illegal border
crossings, acquisition programs play critical roles in
fulfilling the Department's missions and ensuring frontline
operators have the tools and capabilities necessary to protect
and secure the homeland.
---------------------------------------------------------------------------
\1\DHS Management and Acquisition Reform: Hearing Before the S.
Comm. on Homeland Sec. & Governmental Affairs, 114th Cong. (2016)
(written testimony of Russell Deyo, Under Sec'y of Mgmt., U.S. Dep't of
Homeland Sec., and Charles Fulghum, Chief Financial Officer, U.S. Dep't
of Homeland Sec.), available at https://www.dhs.gov/news/2016/03/16/
written-testimony-mgmt-under-secretary-and-deputy-under-secretary-
senate-committee.
---------------------------------------------------------------------------
DHS continues to face scrutiny from independent government
watchdogs due to improper management and excessive cost growth
of its major acquisitions programs. For instance, both the GAO
and the DHS OIG have found that DHS's acquisition programs
``continue to cost more than expected, take longer to deploy
than planned, or deliver less capability than promised.''\2\
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\2\DHS Management and Acquisition Reform: Hearing Before the S.
Comm. on Homeland Sec. & Governmental Affairs, 114th Cong. 1 (2016)
(written testimony of John Roth, Inspector General, U.S. Dep't of
Homeland Sec.), available at https://www.oig.dhs.gov/assets/TM/2016/
OIGtm-JR-031616.pdf; see also U.S. Gov't Accountability Office, GAO-17-
346SP, Homeland Security Acquisitions: Earlier Requirements Definition
and Clear Documentation of Key Decisions Could Facilitate Ongoing
Progress 45 (2017), http://www.gao.gov/assets/690/683977.pdf.
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The Committee held a hearing in March 2016, entitled DHS
Management and Acquisition Reform.\3\ During the hearing, DHS
Inspector General John Roth testified that, ``[a]lthough the
Department has improved its acquisition processes and taken
steps to strengthen oversight of major acquisition programs,
challenges to cost effectiveness and efficiency remain.''\4\
One of the specific ongoing challenges identified by the OIG
included that DHS ``lacks acquisition management tools to
consistently determine whether major acquisitions are on track
to achieve their cost, schedule, and capability goals.''\5\ The
Inspector General's testimony highlighted GAO's findings in
April 2015 that ``about half of DHS's major [acquisition]
programs lacked an approved baseline, and 77 percent lacked
approved life cycle cost estimates.''\6\ Without the critical
tools necessary to evaluate potential shortcomings, major
acquisition programs can falter, and subsequently breach their
cost, schedule, and performance requirements.\7\ When a breach
does occur, it is imperative that DHS act swiftly to mitigate
potential damage to the program's success and to save taxpayer
money.\8\
---------------------------------------------------------------------------
\3\DHS Management and Acquisition Reform: Hearing Before the S.
Comm. on Homeland Sec. & Governmental Affairs, 114th Cong. (2016),
available at https://www.hsgac.senate.gov/hearings/dhs-management-and-
acquisition-reform.
\4\Id. (testimony of John Roth, Inspector General, U.S. Dep't of
Homeland Sec.), available at https://www.oig.dhs.gov/sites/default/
files/assets/TM/2016/OIGtm-JR-031616.pdf at 1.
\5\Id. at 12.
\6\Id.; see also U.S. Gov't Accountability Office, GAO-15-171SP,
Homeland Security Acquisitions: Major Program Assessments Reveal
Actions Needed to Improve Accountability (2015), http://www.gao.gov/
assets/670/669791.pdf.
\7\Id. at 7.
\8\Id. at 13.
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Another potential impediment to the efficient and effective
management of acquisition program resources is the bid protest
process. Under the Federal Acquisition Regulation (FAR), a
private company bidding on a contract with a Federal agency may
file a bid protest with either the GAO or the U.S. Court of
Federal Claims on the basis of the criteria set forth in the
FAR.\9\ The number of bid protests filed by private industry
has continued to increase in recent years.\10\ This has been
evidenced by an increase in the GAO's bid protest activity,
which went from 2,429 cases in fiscal year 2013 to 2,789 cases
in fiscal year 2016.\11\ The bid protest process may be seen as
a mechanism for competing for new contracts and maintaining
existing contracts.\12\ While the bid protest process serves a
valuable oversight function, constant focus on the likelihood
of a protest and compliance during the procurement process may
create a risk-averse culture among Federal acquisitions
officials that may stymie innovation and contribute to the
overall inefficiency of the procurement process.\13\
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\9\See Federal Acquisition Regulation, 48 C.F.R. Sec. 33.104-105
(2005).
\10\Jason Miller, Bid Protests Continue to Rise as Agencies Take
Corrective Action More Quickly, Federal News Radio (Nov. 20, 2014),
https://federalnewsradio.com/congress/2014/11/bid-protests-continue-to-
rise-as-agencies-take-corrective-action-more-quickly; Andy Medici,
Defense Bill Asks If Contractors Are Gaming Bid Protests, Federal Times
(May 4, 2015), http://www.federaltimes.com/acquisition/2015/05/04/
defense-bill-asks-if-contractors-are-gaming-bid-protests.
\11\Letter from Susan A. Poling, General Counsel, U.S. Gov't
Accountability Office, to Congressional Committees on the GAO Bid
Protest Annual Report to Congress for Fiscal Year 2013 (Jan. 2, 2014),
available at http://www.gao.gov/assets/660/659993.pdf; Letter from
Susan A. Poling, General Counsel, U.S. Gov't Accountability Office, to
Congressional Committees on the GAO Bid Protest Annual Report to
Congress for Fiscal Year 2016 (Dec. 15, 2016), available at http://
www.gao.gov/assets/690/681662.pdf.
\12\Bruce Tsai, Targeting Frivolous Bid Protests by Revisiting the
Competition in Contracting Act's Automatic Stay Provision (2015),
http://www.ncmahq.org/docs/default-source/default-document-library/
articles/jcm15---article-07.
\13\Id.
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S. 906 aims to prevent unnecessary cost growth by holding
DHS accountable when the Department fails to meet program
baseline requirements. Specifically, this bill requires greater
Departmental and congressional oversight of major DHS
acquisition programs when a major acquisition program--defined
as those with total expenditures of $300 million or more--fails
to meet any cost, schedule, or performance thresholds specified
in the program's most recently approved acquisition program
baseline. Lastly, the bill as amended in Committee requires the
OIG to study the impact of the bid protest process on, among
other things, DHS's acquisition management processes, and
report the findings to this Committee and the House Homeland
Security Committee. The report would assess the bid protest
process, including reviewing the number of bid protests filed
across the Federal Government and Federal courts, the
effectiveness of each forum, and how the bid protest process
affects the cost and schedule of major acquisition programs.
III. Legislative History
Senators Claire McCaskill (D-MO) and Steve Daines (R-MT)
introduced S. 906, the Reducing DHS Acquisition Cost Growth
Act, on April 7, 2017. The bill was referred to the Committee
on Homeland Security and Governmental Affairs.
The Committee considered S. 906 at a business meeting on
July 26, 2017. During the business meeting, a McCain substitute
amendment that required an OIG study and report on bid protests
was adopted by voice vote en bloc. Senators present for the
vote were Johnson, Portman, Lankford, Daines, McCaskill,
Tester, Heitkamp, Peters, Hassan, and Harris.
The Committee favorably reported the bill, as amended by
the McCain substitute amendment, by voice vote en bloc.
Senators present for the vote were Johnson, Portman, Lankford,
Daines, McCaskill, Tester, Heitkamp, Peters, Hassan, and
Harris. Consistent with Committee Rule 11, the Committee
reports the bill with a technical amendment by mutual agreement
of the Chairman and Ranking Member.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section names the bill the ``Reducing DHS Acquisition
Cost Growth Act.''
Sec. 2. Congressional notification for major acquisition programs
Section 2 adds a new section 836 following the end of
Subtitle D of title VIII of the Homeland Security Act of 2002.
New subsection 836(a) provides definitions for the terms
``acquisition,'' ``acquisition program,'' ``acquisition program
baseline,'' ``appropriate committees of Congress,'' ``best
practices,'' ``breach,'' ``component acquisition executive,''
and ``major acquisition program.''
New subsection 836(b) details the steps that DHS must take
in the event of a breach of a major acquisition program.
Paragraph (b)(1) requires the program manager of a major
acquisition program in breach to notify the appropriate DHS
authorities, such as the Under Secretary for Management (USM),
no later than 30 days after the breach is identified. If,
however, the breach results in a cost overrun greater than 15
percent, a schedule delay greater than 180 days, or a failure
to meet any of the performance thresholds detailed in the most
recently approved acquisition program baseline for the program,
the Component Acquisition Executive for the program is also
required to notify the Secretary of DHS and the DHS Inspector
General no later than 5 days after notification of the breach
is received.
Paragraph (b)(2) requires a remediation plan and root cause
analysis to be performed on major acquisition programs in
breach. Program managers are required to develop a plan to
remediate the breach, which must, among other things, propose
corrective actions for addressing the breach and conduct an
analysis identifying potential root causes behind the breach.
This plan must be submitted to the head of the relevant DHS
component, the Department's Program Accountability and Risk
Management division, and the USM.
Paragraph (b)(3) requires the USM to review the corrective
actions and either approve the plan or provide alternative
corrective actions for addressing the breach. The USM must
submit a copy of the remediation plan, root cause analysis, and
a description of actions taken to address the breach to the
appropriate committees of Congress no later than 30 days after
completing the review.
New subsection 836(c) requires the USM to notify Congress
of a breach in a major acquisition program in the next
quarterly Comprehensive Acquisition Status Report, and details
what information must be included in the event the likely cost
overrun is greater than 20 percent or likely delay is greater
than 12 months from the acquisition program baseline.
Sec. 3. Report on bid protests
Section 3 of the bill requires the OIG to conduct a single
comprehensive study on the prevalence and impact of bid
protests performed by GAO and the Federal courts on DHS's
acquisition process. Specifically, this section requires the
OIG to report on the time DHS spends at each phase of the
procurement process attempting to prevent a protest, addressing
a protest, or taking corrective action in response to a
protest. Additionally, the report is to include information on
the extent the bid protest process affects or may affect a
company's decision to offer a bid or proposal.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
August 18, 2017.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 906, the Reducing
DHS Acquisition Cost Growth Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Jacob Fabian.
Sincerely,
Keith Hall.
Enclosure.
S. 906--Reducing DHS Acquisition Cost Growth Act
S. 906 would specify procedures to be followed by the
Department of Homeland Security (DHS) if it fails to meet
certain timelines or other performance standards for its major
acquisition programs. Additionally, the bill would require an
Inspector General report to be submitted to the Congress on the
prevalence and impact of bid protests on the acquisition
process of DHS. Based on information from DHS, CBO estimates
that implementing the new administrative procedures would cost
less than $500,000 annually; such spending would be subject to
the availability of appropriated funds.
Enacting the legislation would not affect direct spending
or revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting S. 906 would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2028.
S. 906 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
On March 22, 2017, CBO transmitted a cost estimate for H.R.
1294, the Reducing DHS Acquisition Cost Growth Act, as passed
by the U.S. House of Representatives on March 20, 2017. The two
pieces of legislation are similar and CBO's estimates of their
costs are the same.
The CBO staff contact for this estimate is Jacob Fabian.
The estimate was approved by Theresa Gullo, Assistant Director
for Budget Analysis.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill as reported are shown as follows (existing law
proposed to be omitted is enclosed in brackets, new matter is
printed in italic, and existing law in which no change is
proposed is shown in roman):
HOMELAND SECURITY ACT OF 2002
* * * * * * *
TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL;
UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS
* * * * * * *
Subtitle D--Acquisitions
* * * * * * *
SEC. 836. CONGRESSIONAL NOTIFICATION AND OTHER REQUIREMENTS FOR MAJOR
ACQUISITION PROGRAM BREACH.
(a) Definitions.--In this section:
(1) Acquisition.--The term ``acquisition'' has the
meaning given the term in section 131 of title 41,
United States Code.
(2) Acquisition program.--The term ``acquisition
program'' means the process by which the Department
acquires, with any appropriated amounts, by contract
for purchase or lease, property or services (including
construction) that support the missions and goals of
the Department.
(3) Acquisition program baseline.--The term
``acquisition program baseline'', with respect to an
acquisition program, means a summary of the cost,
schedule, and performance parameters, expressed in
standard, measurable, quantitative terms, which shall
be met in order to accomplish the goals of the program.
(4) Appropriate committees of congress.--The term
``appropriate committees of Congress'' has the meaning
given the term in section 226(a).
(5) Best practices.--The term ``best practices'',
with respect to acquisition, means a knowledge-based
approach to capability development that includes--
(A) identifying and validating needs;
(B) assessing alternatives to select the most
appropriate solution;
(C) clearly establishing well-defined
requirements;
(D) developing realistic cost assessments and
schedules;
(E) securing stable funding that matches
resources to requirements;
(F) demonstrating technology, design, and
manufacturing maturity;
(G) using milestones and exit criteria or
specific accomplishments that demonstrate
progress;
(H) adopting and executing standardized
processes with known success across programs;
(I) establishing an adequate workforce that
is qualified and sufficient to perform
necessary functions; and
(J) integrating the capabilities described in
subparagraphs (A) through (I) into the mission
and business operations of the Department.
(6) Breach.--The term ``breach'', with respect to a
major acquisition program, means a failure to meet any
cost, schedule, or performance threshold specified in
the most recently approved acquisition program
baseline.
(7) Component acquisition executive.--The term
``Component Acquisition Executive'' means the senior
acquisition official within a component who is
designated in writing by the Under Secretary for
Management, in consultation with the component head,
with authority and responsibility for leading a process
and staff to provide acquisition and program management
oversight, policy, and guidance to ensure that
statutory, regulatory, and higher level policy
requirements are fulfilled, including compliance with
Federal law, the Federal Acquisition Regulation, and
Department acquisition management directives
established by the Under Secretary for Management.
(8) Major acquisition program.--The term ``major
acquisition program'' means an acquisition program of
the Department that is estimated by the Secretary to
require an eventual total expenditure of at least
$300,000,000 (based on fiscal year 2017 constant
dollars) over the life cycle cost of the program.
(b) Requirements Within Department in Event of Breach.--
(1) Notifications.--
(A) Notification of breach.--If a breach
occurs in a major acquisition program, the
program manager for the program shall notify
the Component Acquisition Executive for the
program, the head of the component concerned,
the Executive Director of the Program
Accountability and Risk Management division,
the Under Secretary for Management, and the
Deputy Secretary not later than 30 calendar
days after the date on which the breach is
identified.
(B) Notification to secretary.--If a breach
occurs in a major acquisition program and the
breach results in a cost overrun greater than
15 percent, a schedule delay greater than 180
days, or a failure to meet any of the
performance thresholds from the cost, schedule,
or performance parameters specified in the most
recently approved acquisition program baseline
for the program, the Component Acquisition
Executive for the program shall notify the
Secretary and the Inspector General of the
Department not later than 5 business days after
the date on which the Component Acquisition
Executive for the program, the head of the
component concerned, the Executive Director of
the Program Accountability and Risk Management
Division, the Under Secretary for Management,
and the Deputy Secretary are notified of the
breach under subparagraph (A).
(2) Remediation plan and root cause analysis.--
(A) In general.--If a breach occurs in a
major acquisition program, the program manager
for the program shall submit in writing to the
head of the component concerned, the Executive
Director of the Program Accountability and Risk
Management division, and the Under Secretary
for Management, at a date established by the
Under Secretary for Management, a remediation
plan and root cause analysis relating to the
breach and program.
(B) Remediation plan.--The remediation plan
required under subparagraph (A) shall--
(i) explain the circumstances of the
breach at issue;
(ii) provide prior cost estimating
information;
(iii) include a root cause analysis
that determines the underlying cause or
causes of shortcomings in cost,
schedule, or performance of the major
acquisition program with respect to
which the breach has occurred,
including the role, if any, of--
(I) unrealistic performance
expectations;
(II) unrealistic baseline
estimates for cost or schedule
or changes in program
requirements;
(III) immature technologies
or excessive manufacturing or
integration risk;
(IV) unanticipated design,
engineering, manufacturing, or
technology integration issues
arising during program
performance;
(V) changes to the scope of
the program;
(VI) inadequate program
funding or changes in planned
out-year funding from one 5-
year funding plan to the next
5-year funding plan as outlined
in the Future Years Homeland
Security Program required under
section 874;
(VII) legislative, legal, or
regulatory changes; or
(VIII) inadequate program
management personnel, including
lack of sufficient number of
staff, training, credentials,
certifications, or use of best
practices;
(iv) propose corrective action to
address cost growth, schedule delays,
or performance issues;
(v) explain the rationale for why a
proposed corrective action is
recommended; and
(vi) in coordination with the
Component Acquisition Executive for the
program, discuss all options
considered, including--
(I) the estimated impact on
cost, schedule, or performance
of the program if no changes
are made to current
requirements;
(II) the estimated cost of
the program if requirements are
modified; and
(III) the extent to which
funding from other programs
will need to be reduced to
cover the cost growth of the
program.
(3) Review of corrective actions.--
(A) In general.--The Under Secretary for
Management--
(i) shall review each remediation
plan required under paragraph (2); and
(ii) not later than 30 days after
submission of a remediation plan under
paragraph (2), may approve the plan or
provide an alternative proposed
corrective action.
(B) Submission to congress.--Not later than
30 days after the date on which the Under
Secretary for Management completes a review of
a remediation plan under subparagraph (A), the
Under Secretary for Management shall submit to
the appropriate committees of Congress--
(i) a copy of the remediation plan;
and
(ii) a statement describing the
corrective action or actions that have
occurred pursuant to paragraph
(2)(B)(iv) for the major acquisition
program at issue, with a justification
for each action.
(c) Requirements Relating to Congressional Notification if
Breach Occurs.--
(1) Notification to congress.--If a notification to
the Secretary is made under subsection (b)(1)(B)
relating to a breach in a major acquisition program,
the Under Secretary for Management shall notify the
appropriate committees of Congress of the breach in the
next quarterly Comprehensive Acquisition Status Report,
as required in the matter under the heading ``Office of
the Under Secretary for Management'' in title I of
division F of the Consolidated Appropriations Act of
2016 (Public Law 114-113; 129 Stat. 2493), after
receipt by the Under Secretary for Management of
notification under that subsection.
(2) Significant variances in costs or schedule.--If a
likely cost overrun is greater than 20 percent or a
likely delay is greater than 12 months from the costs
and schedule specified in the acquisition program
baseline for a major acquisition program, the Under
Secretary for Management shall include in the
notification required in paragraph (1) a written
certification, with supporting explanation, that--
(A) the program is essential to the
accomplishment of the mission of the
Department;
(B) there are no alternatives to the
capability or asset provided by the program
that will provide equal or greater capability
in a more cost-effective and timely manner;
(C) the new acquisition schedule and
estimates for total acquisition cost are
reasonable; and
(D) the management structure for the program
is adequate to manage and control cost,
schedule, and performance.
* * * * * * *
[all]