Report on surge capacity in the defense industrial base

(a) Report required Not later than March 1, 2026, the Assistant Secretary of Defense for Industrial Base Policy and the Director of Defense Pricing, Contracting, and Acquisition Policy shall jointly submit to the Committees on Armed Services of the House of Representatives and the Senate a report on efforts to identify and address regulations or policies that discourage or prevent contractors in the defense industrial base from maintaining or investing in surge capacity. (b) Elements The report required subsection (a) shall include the following: (1) An identification of policies that incentivize contractors in the defense industrial base to reduce or eliminate surge capacity, including section 31.205-17 of the Federal Acquisition Regulation (relating to idle facilities and idle capacity costs). (2) Any steps taken by the Secretary of Defense to address regulatory barriers discouraging or preventing contractors in the defense industrial base from maintaining or investing in surge capacity within the defense industrial base as part of the implementation of Executive Order 14265 titled Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base (90 Fed. Reg. 15621; April 15, 2025). (3) The assessment of the demonstration exercise of industrial mobilization and supply chain management planning capabilities required by section 859(d) of the National Defense Authorization Act for Fiscal Year 2023 (10 U.S.C. 4811 note). (c) Surge capacity defined In this section, the term surge capacity mean the ability of contractors in the defense industrial base to rapidly increase production capacity to meet increased demand for defense articles and defense services (as such terms are defined, respectively, in section 301 of title 10, United States Code).