Life Cycle Cost Composition Life Cycle Cost Program

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

Cost Estimating Requirements ACAT IC & ID (MDAP) POE ACAT IA Program initiation & all subsequent milestones, including FRP DR Program initiation & all subsequent milestones - Includes Economic Analysis CARD MS A & all subsequent milestones including FRP DR - Draft 180 days prior to OIPT/milestone - Final 45 days prior to OIPT/milestone CCE MS A and all subsequent milestones including FRP DR ICE MS A & whenever Economic Analysis is required - Draft 180 days prior to OIPT/milestone - Final 45 days prior to OIPT/milestone Required by law for all MDAP programs * MS A and whenever an Economic Analysis is required - Prepared by OSD CAPE for ACAT ID, and ACAT IC at discretion of USD (AT&L) - Prepared by component cost agency (AFCAA, DASA-CE, NCCA) for ACAT IC (if no CAPE estimate) - In advance of any certification under Title 10, USC, Section 2366 a (MS A) and Section 2366 b (MS B) - In advance of any decision to enter low-rate initial production (LRIP) (MS C) or full-rate production (FRP DR) - In advance of any certification of MDAPs that experience critical cost growth (Title 10, USC, Sec 2433 a) *ICE statutory requirement (Title 10, US Code, Sec 2434) and P. L. 111 -23, May 22, 2009 Source: Do. DI 5000. 02 January 7, 2015, Incorporating Change 3, August 10, 2017 and Weapon Systems Acquisition Reform Act of 2009 ACAT II & ACAT III: POE (and, at MDA discretion, an independent cost estimate prepared by the component cost agency) at program initiation and all subsequent milestones AFCAA = Air Force Cost Analysis Agency ACAT = Acquisition Category CAPE = Cost Assessment & Program Evaluation CARD = Cost Analysis Requirements Description CCE = Component Cost Estimate 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)

PPBE – Planning Phase - Lead by USD (P) YEAR 1 Elapsed Time: 15 -16 Months FEB/MAR President National Security Council CIA/DIA/JCS/OSD Planning Phase focus: • Threat vs. Capabilities • Update strategy • Guidance for Programming & Budgeting YEAR 2 APR/MAY CIA – Central Intelligence Agency COCOM – Combatant Commander CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency DPG – Defense Planning Guidance JCS – Joint Chiefs of Staff NDS – National Defense Strategy (absorbed QDR) NMS – National Military Strategy NSS – National Security Strategy OSD – Office of the Secretary of Defense USD(P) – Undersecretary of Defense (Policy) NSS New NDS at least every 4 years to Congress (absorbed QDR content). Intervening years require annual assessment of current NDS. OSD Level JCS Level (JCS, COCOMs, SERVICES) NDS NMS Guidance for POM/BES submission and OSD Program & Budget Review DPG CPR

PPBE – Program/Budget Submission/Review Yr 2 NOV OCT Aug/SEP DEC Year 3 JAN/FEB Do. D “Large Group” 3 -Star Group OSD/ CAPE Issue Resolution POM Services PEO/PM CPA (JCS) BES Advance Questions SECDEF DEPSECDEF SLRG & DMAG RMDs PB OSD/OMB Budget Hearings USD(C) & OMB FYDP Update MBI FYDP Update Budget Review focus: - Pricing - Phasing - Funding policies - Budget execution Program Review focus: • Compliance with DPG

BES – Budget Estimate Submission CAPE – Cost Assessment & Prgm Evaluation COCOM – Combatant Commander CPA – Chairman’s Program Assessment DMAG – Deputy’s Management Action Group FYDP – Future Years Defense Program MBI – Major Budget Issues OMB – Office of Management and Budget PB – President’s Budget POM – Program Objectives Memorandum RMD – Resource Management Decision SLRG – Senior Leader Review Group

Resource Allocation Process

Congressional Enactment Timetable JAN FEB MAR APR MAY JUN JUL AUG SEP OCT ^ 15 15 PRES BUDGET “TARGET” FISCAL YEAR COMMITTEE INPUTS FLOOR BUDGET RESOLUTION HOUSE SENATE HRNGS MARKS FLOOR CONF RESOLUTION HRNGS MARKS FLOOR ^ FLOOR BILL / RPT AUTHORIZATION HOUSE SENATE HASC HRNGS MARK-UP FLOOR SASC HRNGS MARK-UP FLOOR CONF /RPT ACT FLOOR ^ BILL / RPT APPROPRIATION HOUSE SENATE FLOOR HAC HRNGS MARK-UP FLOOR SAC HRNGS MARK-UP FLOOR CONF /RPT FLOOR BILL / RPT ACT ^

Below Threshold Reprogramming Amounts are Cumulative Over Entire Period of Obligation Availability APPRN MAX INTO MAX OUT LEVEL OF CONTROL OBL AVAIL RDT & E Lesser of + $10 M or + 20% Lesser of - $10 M or - 20% PROC Lesser of + $20 M or + 20% Lesser of - $20 M or - 20% O & M MILPERS MILCON + $15 M + $10 M - $15 M No Specific Congressional Restriction No Specific Lesser of + $2 M Congressional + 25 % Restriction Program Element Line Item Budget Activity (or Defense Agency) Some Sub-Activity Limitations on Decreases (see reference below) Budget Activity Project 2 Years 3 Years SCN: 5 Years 1 Year 5 Years Reference Sources: Do. DFMR 7000. 14 -R, Volume 3, Chapter 6 (Sept 2015) and Chapter 7 (Mar 2011)

Appropriation Life Cycle Years 1 2 O&M 3 4 5 6 7 8 9 10 11 RDT&E Procurement Ships (SCN) MILCON MILPERS Current Period: Available for new obligations, obligation adjustments, expenditures, and outlays Expired Period: Available for obligation adjustments, expenditures, and outlays Cancelled: Unavailable for obligations, obligation adjustments, expenditures, and outlays

AFCAA = Air Force Cost Analysis Agency CAPE = Cost Assessment & Program Evaluation 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)