1. Life Cycle Cost Composition
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$
Life Cycle Cost
Program Acquisition Cost
Development Cost
RDT & E
RDT & E
Development Costs of
Development Costs of
PME & Support Items
MILCON
Operations &
PME & Support Items
MILCON
Operations &
Systems Engineering
Facilities
Support
Systems Engineering
Facilities
Support
Program Management
O&M, MILPERS
Program Management •
O&M, MILPERS
Test & Evaluation
Test & Evaluation
Procurement Cost
Weapon System Cost
Disposal
Flyaway Cost
Disposal
O&M (or others •
O&M (or others
as appropriate)
PROCUREMENT
as appropriate)
PROCUREMENT
PROCUREMENT
PROCUREMENT
Prime
PROCUREMENT
PROCUREMENT
Prime
Support Items
Initial Spares
Equipment
Support Items
Initial Spares
Equipment

2. Cost Estimating Requirements
ACAT IC & ID ACAT IA
POE Program initiation & all subsequent Program initiation & all subsequent
milestones, including FRP DR milestones
- Includes Economic Analysis
CARD Required same as ICE or CCA Required same as CCA
- Draft 180 days prior to OIPT/milestone - Draft 180 days prior to OIPT/milestone
- Final 45 days prior to OIPT/milestone - Final 45 days prior to OIPT/milestone
CCA Usually serves as ICE for ACAT IC programs Program initiation & whenever
- Prepared by component cost agency (AFCAA, Economic Analysis is required
DASA-CE, NCCA)
- Program initiation & all subsequent milestones
including FRP DR
- Prepared at MDA discretion for other programs
ICE Required by law for all MDAP programs *
- Prepared by OSD CAIG for ACAT ID and ACAT IC
at discretion of USD (AT&L)
*ICE statutory requirement (Title 10, US Code, Sec 2434)
Source: DoDI As of: Jul 07
CARD: Basically must be prepared any time an independent estimate (ICE or CCA) is to be done
POE: Every ACAT I and IA program must have a life cycle cost estimate at each milestone. This is inferred from DoD R. Note that ACAT IA estimates are to include estimates of benefits as well as costs (to determine ROI).
CCA: These requirements are taken from DoD R. Note that a CCA serves as the ICE for an ACAT IC program when CAIG does not perform ICE.
Why no CCA MSB for ACAT IA pgms? Majority of costs are in development
ICE: Title 10, USC Sec 2434 requires ICE at MS II and III for MDAPs; DoD R requires ICE at MS A, B, C. CAIG will do ICE for all ACAT ID programs and those ACAT IC programs requested by USD (A&T). Note that ACAT IA programs are not subject to Title 10 requirement because they are not weapon systems (MDAPs).
TRANS: Now let’s take a look at the review process for these estimates
ACAT II & ACAT III: POE (and CCA at MDA discretion) at program initiation and all subsequent milestones
Acronym Legend
AFCAA = Air Force Cost Analysis Agency
CAIG = Cost Analysis Improvement Group
CARD = Cost Analysis Requirements Description
CCA = Component Cost Analysis
DASA-CE = Dep Asst Sec of Army (Cost & Economics)
FRP DR = Full Rate Production Decision Review
ICE = Independent Cost Estimate
MDA = Milestone Decision Authority
MDAP = Major Defense Acquisition Program
NCCA = Naval Center for Cost Analysis
OIPT = Overarching Integrated Product Team
POE = Program Office Estimate
USD(AT&L) = Under Secretary of Defense
(Acquisition, Technology, & Logistics)

3. Program Cost and Schedule Breach Parameters
Applicable to Major Defense Acquisition Programs (MDAPs)
SAR
Unit Cost Report (UCR)
APB
(Title 10, US Code, Sec 2432)
(Title 10, US Code, Sec 2433) (Nunn-McCurdy)
(Title 10, US Code, Sec 2435)
Schedule Milestones
6 Month Slip From
Slip beyond threshold date
* Default threshold = objective
plus 6 mon; MDA discretion
N/A
Previous SAR
15%/30% PAUC Growth
Cost
15/30% PAUC Growth
15/30% PAUC Growth
15%/30% APUC Growth
(Current/Original)
(Current/Original)
(Current/Original)
* RDT&E Growth
15/30% APUC Growth
15/30% APUC Growth
* Procurement Growth
(Current/Original)
(Current/Original)
* MilCon or O&M Growth
* 10% default; MDA discretion
Reports Required
Quarterly SAR
Quarterly/Exception DAES
Program Deviation Rpt
If Breach Occurs
Service notifies Congress(>15/30%)
(PM notifies MDA)
SecDef Certification (>25/50%)
ACAT II & III:
15%/30% PAUC/APUC APB breach parameters are N/A; actual breach parameters at MDA discretion
Critical Cost Growth (APB/SAR/UCR)
PAUC or APUC increases of 25% of current baseline or 50% of original baseline requires Sec Def certification to Congress:
-- Essential to National Defense
-- No alternatives
-- Cost are under control
-- Management is in place to keep costs under control
Legend :
APUC = Average Procurement Unit Cost APB = Acquisition Program Baseline
PAUC = Program Acquisition Unit Cost SAR = Selected Acquisition Report
DAES = Defense Acquisition Executive Summary
Significant Cost Growth (APB/SAR/UCR)
PAUC or APUC increases of 15% of current baseline or 30% of original baseline is “reportable” to Congress

4. 1st year of a new administration (2nd year of new administration)
PPBE - Planning Phase
SEP
DEC
MAR
APR/MAY
President
National Security Council
CIA/DIA/JCS/OSD
1st Year
2nd Year
Notes
SPG replaces Draft Defense
Planning Guidance (DPG)
JPG replaces DPG
COCOM – Combatant Commander
CPR – Chairman’s Pgm Recommendation
JCS – Joint Chiefs of Staff
JPD – Joint Planning Document
JPG – Joint Programming Guidance
NSS – National Security Strategy
NMS – National Military Strategy
QDR – Quadrennial Defense Review
SPG – Strategic Planning Guidance
NSS
1st year of a new administration
CPR
SECDEF
2003 House Auth Rpt (HASC) directed DoD to prepare NMS biennially (even-yr) starting 15 Feb 2004
What does the planning phase look like in an off-yr when there’s no DPG?
Graphic description: Titled Planning Phase. Boxes represent actors; ovals represent documents. Box in top left labeled “President, National Security Council, CIA/DIA/JCS/OSD”. Arrow from this box points down to oval labeled “National Security Strategy (NSS)”. Note next to NSS oval reads “1st year of a new administration”. Arrow from NSS oval points down to box labeled “JCS, Combatant Commands (COCOMs), Services”. Arrow from this box points to the right to oval labeled “National Military Strategy (NMS)”. Note below NMS oval reads “Strategy also reflected in Quadrennial Defense Review (QDR)”. Arrow from NMS oval points right to oval labeled “Joint Planning Document (JPD)”. Arrow from JPD oval points right to oval labeled “Draft Defense Planning Guidance (DPG)”. Arrow from this oval points right to box labeled “JCS, OSD, COCOMs, Service Headquarters, etc.” Arrow from this box points right to oval labeled “DPG.” Another arrow from the JPD oval points up and to the right to an oval labeled “Chairman’s Program Recommendations (CPR)”. Arrow from CPR oval points right to box labeled “SECDEF”. Arrow from SECDEF box points down to DPG oval. Timeline across top of graphic shows (left to right) JPD occurring in Sep of 1st year; Draft DPG in Feb of 2nd year; CPR in Mar, and DPG in Apr/May.
JCS
COCOMs
SERVICES
NMS
JPD
SPG
JPG
JCS, OSD,
COCOMs,
SVC HQs,
ETC.
Strategy
also reflected in QDR
(2nd year of new administration)

5. PPBE - Concurrent Program/Budget Review
AUG
OCT
NOV
DEC
JAN/FEB
3-Star Group
BES – Budget Estimate Submission
COCOM – Combatant Commander
CPA – Chairman’s Pgm Assessment
DAWG – Deputy’s Advisory Working Group
MBI – Major Budget Issues
PB – President’s Budget
PBD – Program Budget Decision
PDM – Program Decision Memo
POM – Program Objectives Memo
SLRG – Senior Leadership Review Group
OSD/
OMB
Issue
Resolution
POM
SECDEF
SLRG&DAWG
PDM
CPA
JCS
Services
PEO/PM,
SVC HQs
COCOMs
Notes
3-Star Group replaces Program Review Group (PRG)
SLRG replaces Defense Resources Board (DRB)
Graphic description: Titled Concurrent Program/Budget Review. Box on left labeled “Services, PEO/PM, Svc HQs, COCOMs”. Two arrows animate, one up and to the right to oval labeled “Program Objectives Memorandum (POM)” and one down and to the right to oval labeled “Budget Estimate Submission (BES)”. Two arrows animate from POM oval, one up and to right to oval labeled “Issue Resolution” with overlapping box labeled “OSD/OMB”; the second arrow goes down and to the right to oval labeled “Chairman’s Program Assessment (CPA)” with overlapping box labeled “JCS”. Arrows animate right from CPA and Issue Resolution ovals meet at box labeled “SECDEF/Defense Resources Board (DRB)”; arrow from this box animates right to oval labeled “Program Decision Memorandum (PDM)”. Next, arrow animates right from BES oval to two offset overlapping long ovals labeled “Advance Questions/Hearings” and “Program Budget Decisions (PBDs)”. A box labeled “OSD/OMB” overlaps the Advanced Questions oval. A note labeled “Services/PEO/PM answer/reclama” has arrows pointing to both the Advanced Questions oval and the PBDs oval. An arrow animates down from the PDM oval to the PBDs oval. An arrow from the PBDs oval animates right to an oval labeled “Major Budget Issues (MBI)”. A final arrow animates right from MBI oval to oval labeled “President’s Budget (PB)”. Two boxes labeled “Updates FYDP” appear under the BES and PB ovals. A timeline across the top of the graphic indicates POM/BES submittal in August, PDM release in November, MBIs in December and PB submittal in Jan/Feb.
OSD/
OMB
Adv Ques/
Hearings
BES
PBDs
MBI PB
Updates
FYDP
Updates
FYDP
Services / PEO / PM
Answer / Reclama

6. PPBE – Off-Year Program/Budget Review FY09-13 (Aug 07 – Feb 08)
No POM submissions
Focus priority on FY09
Program of record remains FY08 PB
Minimize programmatic changes
Change Proposal (CP) is vehicle to request changes to program of record
No FYDP update until FY09 PB
Complete BES submission provided to OUSD (C) must incorporate all baseline changes
Program/Budget Review Process
3-Star Group oversees CP review
DAWG considers major issues and advises SECDEF
Budget issues reviewed & coordinated through PBD process
SECDEF makes final resource decisions
Approved changes & decisions documented in PDMs & PBDs
This is the schedule we have for the FY Off-Year cycle; they are all Key dates
However, note that:
Fact-of-Life information is due 1 August with OSD decisions being made by 15 August
Service and Agency Change Proposals are due 6 September, along with electronic submissions of OSD-accepted Fact-of Life justification material and any other material OSD may have requested
OSD expects to complete a review of the Service and Agency-submitted Change Proposals by 30 September
They’ll review for compliance with the guidance and acceptability of the offsets
Those that are accepted will be assigned to PA&E or USD(C) for further issue development and resolution
Please note that, as I said before, OSD staff will prepare any Change Proposals considered necessary to implement BRAC and QDR decisions that are made prior to submission of the FY 07 Pres Bud
The overall process should be complete by 20 December with the DoD budget lock
This is a good time to point out that the 12 May Memo announcing the Procedures and Schedule for FY Integrated Program and Budget Review stated that detailed instructions will be provided later in another document and on the Program Review website

7. Resource Allocation Process
CY07
CY08
CY09 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
FY07
Execution
2nd Yr
3rd Yr
FY07 and prior
FY08
Enactment
Execution
2nd Yr
3rd Yr
FY08
FY08 and prior PB
FY09
Planning
Program/Budgeting
Enactment
Execution
2nd
FY09-13
SPG/JPG
FY “Change
Proposals”
FY09
FY09 and prior PB
FY10
Planning
Program/Budgeting
Enactment
Exec
FY SPG/JPG
FY POM
FY BES
FY10
FY10 & prior PB
FY11
Planning
Program/Budgeting
FY SPG/JPG
FY “Change
Proposals”
SPG – Strategic Planning Guidance JPG – Joint Programming Guidance
POM – Program Objectives Memorandum BES – Budget Estimate Submission

8. Congressional Enactment Timetable
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT ^ 15 15
PRES BUDGET
“TARGET” FISCAL YEAR
COMMITTEE INPUTS
FLOOR
HRNGS MARKS FLOOR
HRNGS MARKS FLOOR
HOUSE
SENATE
AUTHORIZATION
APPROPRIATION
BUDGET RESOLUTION
CONF ^
RESOLUTION
BILL / RPT
This is a notional timetable -- based on perfect conditions (which almost never happens in real life.)
Committees (HBC/SBC, HASC/SASC, HAC-D/SAC-D)
Budget Resolution is not a law, but ceilings are binding
If point of order because ceiling exceeded, 60% vote to pass
Should be passed before Auth/Approp begin debating legislation
Auth/Approp all going on at same time (House tends to lead Senate)
Language (Committee and Conference Reports)
TRANSITION: Now that we’ve seen the overall flow of a bill through Congress, let’s look at what DoD can do to affect Congressional action during the process. After the Committees mark up the PB, DoD attempts to convince Congress that some of the marks will be counterproductive -- these are called appeals.
SAC HRNGS MARK-UP FLOOR
HAC HRNGS MARK-UP FLOOR
SASC HRNGS MARK-UP FLOOR
HASC HRNGS MARK-UP FLOOR
FLOOR
CONF /RPT ^
ACT ^
ACT

9. Below Threshold Reprogramming
Amounts are Cumulative Over Entire Period of Obligation Availability
APPRN MAX INTO MAX OUT LEVEL OF CONTROL OBL AVAIL
Lesser of - $10 M or - 20%
RDT & E
+ $10 M
Program Element
2 Years
Lesser of - $20 M or - 20%
3 Years
SCN: 5 Years
+ $20 M
Line Item
PROC
None , unless otherwise specified
Budget Activity
(or Defense Agency)
Some BA 1 Sub-Activity Limitations on Decreases (Operating Forces)
O & M
+ $15 M
1 Year
No Specific Congressional Restriction
+ $10 M
MILPERS
Budget Activity
1 Year
BTR actions are approved by individual services. Service Comptrollers can reprogram these amounts without prior approval of SECDEF or Congress.
These thresholds apply only within Appropriation accts and within the same FY
Delegated to different levels in each Service
Must identify source as well as bill
Go thru thresholds
MILCON has its own appropriation bill (and its own rules in the FMR)
Obligation Availability: Remember that when we talk about reprogrammings, we’re only talking about those available years (01/02 for RDT&E, 00, 01, 02 for procurement). 03 is in prep for PBl. Moving money in the FYDP (03 & out) is called Zero Based Transfer (ZBT)
TRANSITION: What happens to funds that are no longer available for obligation? To answer that we have to revisit appropriation life.
Lessor of $2 M %
No Specific Congressional Restriction
MILCON
Project
5 Years
Reference Source: USD (C) Memo; SUBJECT: FY 2006 Below Threshold Reprogramming Authority Policy, 10 Feb 2006