Accession Number : AD1013630

Title :   The Nunn-McCurdy Act: Background, Analysis, and Issues for Congress

Descriptive Note : Technical Report

Corporate Author : Congressional Research Service Washington United States

Personal Author(s) : Schwartz,Moshe ; O'Connor,Charles V

Full Text :

Report Date : 12 May 2016

Pagination or Media Count : 37

Abstract : The Nunn-McCurdy Act (10 U.S.C. 2433) requires the Department of Defense (DOD) to report to Congress whenever a Major Defense Acquisition Program (MDAP) experiences cost overruns that exceed certain thresholds. A program whose cost growth exceeds the statutory thresholds is said to have a Nunn-McCurdy breach.There are two types of breaches: significant breaches and critical breaches. A significant breach is when the Program Acquisition Unit Cost (the total cost of development, procurement, and construction divided by the number of units procured) or the Procurement Unit Cost (the total procurement cost divided by the number of units to be procured) increases 15% or more over the current baseline estimate or 30% or more over the original baseline estimate. A critical breach occurs when the cost increases 25% or more over the current baseline estimate or 50% or more over the original baseline estimate.The Nunn-McCurdy Act has been amended nine times. One of the most significant changes to the reporting requirements occurred in the FY2006 National Defense Authorization Act (P.L. 109-163), when Congress added the original baseline estimate as a threshold against which to measure cost growth. The new standard prevents DOD from simply re-baselining a program to avoid a breach. Since 2007, there have been 37 Nunn-McCurdy breaches.

Descriptors :   Cost overruns , Federal budgets , federal law , Military procurement , Acquisition , Department of Defense , congress

Distribution Statement : APPROVED FOR PUBLIC RELEASE