The Nunn-McCurdy Act (10 U.S.C. § 2433) requires the DoD to report to Congress whenever a Major Defense Acquisition Program (MDAP) experiences cost overruns that exceed certain thresholds. The purpose of the act is to help control cost growth in major defense systems by holding the appropriate Pentagon officials and defense contractors publicly accountable and responsible for managing costs. [2]

A Nunn-McCurdy Unit Cost Breach review activity is the Under Secretary of Defense (Acquisition, Technology & Logistics) USD (AT&L) process implemented to meet statutory review requirements. USD(AT&L) organizes Integrated Process Teams (IPT) to review the program, alternatives, cost estimates, and national security impacts.

When MDAPs experience cost growth of 15% percent from their current baseline or 30% percent from their original baseline, they are in a “significant” Nunn-McCurdy Unit Cost Breach. Sponsors must notify Congress within 45 calendar days after the report (normally program deviation report) upon which the determination is based. Sponsors must also submit a Selected Acquisition Report (SAR) with the required additional unit cost breach information. [1]

When MDAPs experience cost growth of 25% percent from their current baseline or 50% percent from their original baseline, they are in a “critical” Nunn-McCurdy Unit Cost Breach. Programs in “critical” breach status are subject to detailed review for potential termination. [1]

• USD(AT&L) organizes IPTs to determine national security impact, analyze alternatives, estimate costs and review management structure.
• The Functional Capabilities Boards (FCB), Joint Capabilities Board (JCB), and Joint Requirements Oversight Council (JROC) participate in order to review the driving capability requirements and associated capability gaps and operational risks and provide recommendations with respect to the essentiality of the program to satisfying capability requirements which are critical to national security.
• Joint prioritization informs the review process regarding the priority of the capability requirements driving the program under review.

AcqLinks and References:

• [1] JCIDS Manual for the Operation of the JCIDS
• [2] The Nunn-McCurdy Act: Background, Analysis, and Issues for Congress by Moshe Schwartz – 21 Jun 2010
• Website: 10 U.S.C. § 2433 “Unit Cost Reports”

Updated: 6/15/2018