Life Cycle Cost Composition Life Cycle Cost Program

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

Cost Estimating Requirements ACAT IC & ID (MDAP) ACAT IA (MAIS) POE Program initiation & all subsequent milestones, including FRP DR milestones - Includes Economic Analysis CARD MS A & all subsequent milestones MS A & whenever including FRP DR Economic Analysis is required - Draft 180 days prior to OIPT/milestone - Final 45 days prior to OIPT/milestone CCE MS A and all subsequent milestones including FRP DR is required MS A and whenever an Economic Analysis ICE Required by law for all MDAP programs * - 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) - In advance of any report of Critical Program Changes for MAIS (Title 10, USC, Sec 2445 c(f)) *ICE statutory requirement (Title 10, US Code, Sec 2434) and P. L. 111 -23, May 22, 2009 Source: Do. DI 5000. 02, January 2015 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 MAIS = Major Automated Information System 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 - Led by USD (P) YEAR 1 FEB/MAR President National Security Council CIA/DIA/JCS/OSD NSS Every 4 Years OSD Level JCS Level (JCS, COCOMs, SERVICES) YEAR 2 APR/MAY Elapsed Time: 15 -16 Months DSR NDS CIA – Central Intelligence Agency COCOM – Combatant Commander CPR – Chairman’s Program Recommendation DIA – Defense Intelligence Agency DPG – Defense Planning Guidance DSR – Defense Strategy Review formerly known as the Quadrennial Defense Review JCS – Joint Chiefs of Staff NDS – National Defense Strategy NMS – National Military Strategy NSS – National Security Strategy OSD – Office of the Secretary of Defense USD(P) – Undersecretary of Defense (Policy) DPG Guidance for POM/BES submission and OSD Program & Budget Review Planning Phase focus: NMS CPR • Threat vs. Capabilities • Update strategy • Guidance for Programming & Budgeting

PPBE - Program Review JUL JUN AUG NOV SEP OCT Do. D “Large Group” CAPE Issue Teams POM Components/ Defense Agencies FYDP Update Issue Resolution JCS 3 -Star Group SECDEF / DEPSECDEF SLRG & DMAG CPA Program Review focus: Compliance with DPG PDM CAPE – Cost Assessment & Prgm Evaluation CPA – Chairman’s Program Assessment DEPSECDEF – Deputy Secretary of Defense Do. D – Department of Defense DMAG – Deputy’s Management Action Group DPG – Defense Planning Guidance FYDP – Future Years Defense Program POM – Program Objectives Memorandum PDM – Program Decision Memoranda SLRG – Senior Leader Review Group SECDEF – Secretary of Defense

PPBE – Budget Review DEC JAN FEB Components/ Defense Agencies USD(C) & OMB Adv Questions/ OSD/OMB Budget Hearings BES FYDP Update PBDs Services / PEO / PM Answer / Reclama Budget Review focus: • • Pricing Funding policies Phasing Budget execution PB MBI FYDP Update BES – Budget Estimate Submission FYDP – Future Years Defense Program MBI – Major Budget Issues OMB – Office of Management and Budget OSD – Office of the Secretary of Defense PEO – Program Executive Officer PB – President’s Budget PM – Program Manager PBD – Program Budget Decision USD(C) – Undersecretary of Defense (Comptroller)

Resource Allocation Process Budget. FY 18 Budget. FY 19

Congressional Enactment Timetable JAN FEB MAR APR MAY 15 15 ^ JUN JUL AUG SEP PRES BUDGET “TARGET” FISCAL YEAR COMMITTEE INPUTS FLOOR BUDGET RESOLUTION AUTHORIZATION HOUSE SENATE HRNGS MARKS FLOOR CONF RESOLUTION HRNGS MARKS FLOOR ^ FLOOR HASC HRNGS MARK-UP SASC HRNGS BILL / RPT FLOOR MARK-UP FLOOR CONF /RPT ACT FLOOR ^ BILL / RPT APPROPRIATION HOUSE SENATE HAC HRNGS SAC HRNGS OCT 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 Lesser of - $10 M or Program Element RDT & E + $10 M or 2 Years + 20% - 20% PROC O&M Lesser of + $20 M or + 20% + $15 M Lesser of - $20 M or - 20% - $15 M MILPERS + $10 M No Specific Congressional Restriction MILCON Lesser of + $2 M + 25 % No Specific Congressional Restriction Line Item Budget Activity (or Defense Agency) Some Sub-Activity Limitations on Decreases (see reference below) Budget Activity Project 3 Years SCN: 5 Years 1 Year 5 Years Reference Sources: Do. DFMR 7000. 14 -R, Volume 3, Chapter 6 (Sep 2015) and Chapter 7 (Mar 2011)

Appropriation Life Cycle Years 1 2 3 4 5 6 7 8 9 O&M RDT&E Procurement Ships 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 10 11