The phrase "Nunn-McCurdy breach" refers to a piece of U.S. legislation known as the Nunn-McCurdy Amendment to the Defense Authorization Act of 1982. Senator Sam Nunn and Representative Dave McCurdy introduced the amendment in response to perceived runaway cost overruns in U.S. defense procurement. The Amendment mandated two changes to the business of procurement. One, any Defense-related procurement program which is found to have reached a 15% acquisition unit cost overrun - that is, any program where the cost of each individual item being purchased reaches 115% of the original contract amount - requires the Department of Defense to notify Congress of the overrun. In addition, any program which reaches a unit cost overrun of 25% is required by law to be terminated, unless the Secretary of Defense provides Congress with a detailed justification as to why the program is critical to national security (and Congress accepts the justification).
Although the effectiveness of the Amendment in directly preventing overruns is debatable (for example, in nearly all cases, the Secretary's declarations for programs at the 25% overage level have been treated as a 'rubber stamp'), it does provide for increased transparency in the acquisition process. It is much more difficult for the military to allow spending creep on its programs without keeping Congress 'in the loop' - and Congress does provide some oversight. It can also be argued that problem programs are more easily identified and then subjected to public or legislative debate rather than simply being buried in the yearly bills.
In any case, the 15% overrun criteria is used to determine a Nunn-McCurdy breach. As an example, the Pentagon website DefenseLink offers a sample Nunn-McCurdy report from the 2003 fiscal year, detailing the status of all programs determined to be in breach here.
In 2006, the House of Representatives proposed a change to the way Nunn-McCurdy works by proposing that in the event of a 15% breach, the Secretary of Defense be required to produce a report on possible alternatives to the program in question. As far as I can tell, this was actually implemented in the Defense Authorization Act of 2006 on January 6, 2006. From U.S. Public Law 109-163, Section 802:
(c) ADDITIONAL REQUIREMENTS RELATING TO CERTAIN UNIT COST INCREASES.
—Paragraph (2) of subsection (e) of such section is further amended—
(1) by redesignating subparagraph (B) as subparagraph (C); and
(2) by striking ‘‘the Secretary of Defense’’ and all that follows through
‘‘a written certification, stating that—’’ and inserting
‘‘the Secretary of Defense shall—
‘‘(A) carry out an assessment of—
‘‘(i) the projected cost of completing the program if current
requirements are not modified;
‘‘(ii) the projected cost of completing the program based on
reasonable modification of such requirements; and
‘‘(iii) the rough order of magnitude of the costs of any
reasonable alternative system or capability..." (emphasis mine - TC)
Sources:
- THOMAS (http://thomas.loc.gov)
- U.S. Department of Defense, Defense Authorization Act of 2006 ( http://www.dod.mil/dodgc/olc/docs/PL109-163.pdf )
- Nunn-McCurdy Amendment text, hosted at the Center for Defense Information ( http://www.cdi.org/missile-defense/s815-conf-rpt.cfm )