To amend title 10 to shorten breach reporting timelines, increase program transparency, and improve congressional oversight of Department of Defense cost overruns with respect to the cost growth for major systems, and for other purposes.

Legislative Summary: HR 4372

Title: To amend title 10 to shorten breach reporting timelines, increase program transparency, and improve congressional oversight of Department of Defense cost overruns with respect to the cost growth for major systems, and for other purposes.

Overview

HR 4372 is designed to strengthen financial accountability and transparency within the Department of Defense (DoD) regarding Major Defense Acquisition Programs (MDAPs). The bill focuses on tightening the timelines for reporting cost overruns (known as "Nunn-McCurdy breaches"), increasing public access to oversight documents, and establishing stricter penalties—including mandatory termination—for programs that experience repeated critical cost growth.

Key Provisions

1. Accelerated Reporting Timelines

The bill amends Title 10 of the U.S. Code to replace vague reporting triggers with strict deadlines. Specifically:
* 30-Day Window: The Secretary of Defense must now submit notifications to Congress within 30 days after a unit cost report is issued or a cost-growth determination is made.

2. Enhanced Program Designations and Costing

To prevent large programs from hiding costs within smaller sub-components, the bill introduces:
* Major Subprogram Designation: If a program requires two or more "end items" that each cost more than $500 million (including research, development, and support), those items must be designated as "major subprograms" for reporting purposes.
* Life Cycle Costing: Explicitly requires the inclusion of operations and support costs throughout the entire life cycle of a program or subprogram.

3. Stricter "Critical Breach" Penalties

The bill introduces a "two-strike" policy for programs that experience critical cost growth:
* Mandatory Termination: The Secretary of Defense is prohibited from certifying a program to continue if it has suffered more than one critical unit cost increase. Such programs must be terminated within 90 days of the reassessment.
* Non-Delegable Authority: The Secretary of Defense cannot delegate the responsibility of submitting a written certification to save a breaching program; it must be handled by the Secretary personally.
* Public Transparency: All reports regarding critical cost breaches must be made available to the public on a DoD website.

4. Termination Value Optimization

When a program is terminated due to cost overruns, the bill requires the DoD to consider plans that maximize the value recovered, including:
* Immediate termination.
* Completing only the items already funded/obligated.
* Completing items only if their resale value exceeds the remaining cost of production.

Impact and Affected Parties

• Department of Defense (DoD): The DoD faces significantly higher administrative burdens for reporting and loses discretionary power to save programs that fail cost targets twice.
• Defense Contractors: Contractors managing major systems will be subject to stricter oversight and a higher risk of program cancellation if cost estimates are inaccurate or exceeded.
• U.S. Congress: Lawmakers will receive information regarding cost overruns faster, allowing for quicker legislative intervention or budget adjustments.
• Taxpayers: The bill aims to protect public funds by preventing "sunk cost" fallacies where failing, expensive programs are continued indefinitely.

Procedural Status

• Introduced: July 14, 2025
• Current Status: Referred to the House Committee on Armed Services.