10.7. Management Control
10.8. Program Plans
10.9. Acquisition Program Baseline (APB)
10.9.1. Acquisition Program Baseline (APB) Approval Process
10.9.1.1. Trade-Offs
10.9.2. Acquisition Program Baseline (APB) Management
10.9.3. Acquisition Program Baseline (APB) Content
10.9.3.1. Acquisition Program Baseline (APB) Cost
10.9.3.2. Acquisition Program Baseline (APB) Schedule
10.9.3.3. Acquisition Program Baseline (APB) Performance
10.9.4. Acquisition Program Baseline (APB) for an Evolutionary Acquisition Program
10.9.4.1. Acquisition Program Baseline (APB) for an Increment
10.9.4.2. Acquisition Program Baseline (APB) for a Subprogram
Program Managers (PMs) will implement internal management controls in accordance with DoD Directive 5000.01 and DoD Instruction 5000.02. Acquisition Program Baseline (APB) parameters serve as control objectives. Program managers normally identify deviations from approved APB parameters and exit criteria as material weaknesses. PMs must focus on results, in consonance with most efficient and effective processes. PMs must also ensure that obligations and costs comply with applicable law. Further, they must safeguard assets against waste, loss, unauthorized use, and misappropriation; properly record and account for expenditures; maintain accountability over assets; and quickly correct identified weaknesses.
Program plans describe the detailed activities of the acquisition program. Except as specified by DoD Instruction 5000.02, the Program Manager (in coordination with the Milestone Decision Authority and Program Executive Officer) should determine the type and number of program plans needed to manage program execution.
Department of Defense Instruction (DoDI) 5000.02 requires every Program Manager (PM) to propose and document program goals prior to, and for approval at, program initiation for all Acquisition Category (ACAT) programs. For Major Defense Acquisition Programs (MDAPs), the APB satisfies the requirements in section 2435 of title 10 United States Code and section 2220 of title10 United States Code. DoDI 5000.02 mandates the use of an APB for all other ACAT programs. The APB documents the agreement between the PM, the Program Executive Officer, and the Milestone Decision Authority (MDA) and should reflect the approved program being executed.
A separate APB is required for each increment of an MDAP or MAIS program, and each sub-program of an MDAP. Increments can be used to plan concurrent or sequential efforts to deliver capability more quickly and in line with the technological maturity of each increment. (When an MDAP requires the delivery of two or more categories of end items that differ significantly in form and function, subprograms may be established.)
Program goals consist of an objective value and a threshold value for each Key Performance Parameter and Key System Attribute parameter. Cost, schedule, and performance are intrinsically linked and the objective and threshold values of all program goals should be developed with these relationships in mind. The PM is responsible for managing the trade space between program objectives and thresholds within the bounds of cost, schedule, and performance.
Objective values represent the desired operational goal associated with a performance attribute beyond which any gain in utility does not warrant additional expenditure. Generally, the objective value is an operationally significant increment above the threshold. An objective value may be the same as the threshold when an operationally significant increment above the threshold is not useful.
Thresholds represent the minimum acceptable operational values below which the utility of the system becomes questionable. For performance, a threshold represents either a minimum or maximum acceptable value, while for schedule and cost, thresholds would normally represent maximum allowable values. The failure to attain program thresholds may degrade system performance, delay the program (possibly impacting related programs or systems), or make the program too costly. The failure to attain program thresholds, therefore, places the overall affordability of the program and/or the capability provided by the system into question.
As noted above, each APB parameter must have both an objective and a threshold. For each performance parameter, if no objective is specified, the threshold value will serve as the objective value, and if no threshold is specified, the objective value will serve as the threshold value. For schedule and cost parameters, there are specified default threshold values. The default threshold for schedule is the objective value plus 6 months; the default threshold for cost is the objective value plus 10 percent of the objective value. Despite these guidelines, the PM may propose (with justification) an appropriate threshold value to optimize program trade space, subject to MDA and user approval.
The PM derives the APB from the users' performance requirements, schedule planning and requirements, and best estimates of total program cost consistent with projected funding. The sponsor of a capability needs document (i.e., Capability Development Document or Capability Production Document) provides an objective and a threshold for each attribute that describes an aspect of a system or capability to be developed or acquired. The PM will use this information to develop an optimal product within the available trade space. APB parameter values should represent the program as it is expected to be developed, produced and/or deployed, sustained and funded.
Per section 2435 of title 10 United States Code, the Department of Defense may not obligate funds for Major Defense Acquisition Programs after entry into Engineering and Manufacturing Development without an MDA-approved APB unless the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)) specifically approves the obligation. DoD Instruction 5000.02 extends this policy to Major Automated Information System (MAIS) programs.
The Milestone Decision Authority (MDA) is the approval authority for the APB. The APB requires the concurrence of the Program Executive Officer for all Acquisition Category (ACAT) programs, and the concurrence of the DoD Component Acquisition Executive for ACAT ID and IAM programs.
The Program Manager (PM), in coordination with the user/sponsor, prepares the APB for program initiation. The PM can propose a revision of the APB for approval at each major milestone review and as the program enters full rate production/deployment.
The PM may also propose, for consideration by the Milestone Decision Authority (MDA), a revision of the APB that reflects the result of a major program restructure that occurs between milestone events and is fully funded. The MDA will decide whether or not to approve such a proposal.
All ACAT ID and IAM program APBs and Joint Requirements Oversight Council Interest program APBs must be submitted to the office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD(AT&L))—specifically the office of the Director, Acquisition Resources and Analysis (ARA)—for action. ARA will coordinate ACAT ID and IAM APBs with the appropriate Department stakeholders, minimally including Defense Acquisition Board principals and advisors, prior to forwarding for MDA approval.
Maximizing Program Manager (PM) and contractor flexibility to make cost/performance trade-offs is essential to achieving cost objectives. The PM may treat the difference between an objective and its associated threshold as trade space if the combination values lie within the established thresholds and objectives. Additionally, as development trade space is exercised, the impacts between cost, schedule, and performance should be understood and considered so that values remain within their established objectives and thresholds.
The best time to reduce total ownership cost and program schedule is early in the acquisition process. Continuous cost/schedule/performance trade-off analyses can help attain cost and schedule reductions.
Cost, schedule, and performance may be traded within the "trade space" between the objective and the threshold without obtaining Milestone Decision Authority (MDA) approval. Making trade-offs outside the trade space (i.e., decisions that result in acquisition program parameter changes) require approval of both the MDA and the capability needs approval authority. Validated Key Performance Parameters may not be traded-off without approval by the validation authority. The PM and the user should work together on all trade-off decisions.
Configuration Steering Boards (CSBs) are a core part of managing the cost, schedule, and performance trade space for acquisition programs.
The Program Manager (PM) should immediately notify the Milestone Decision Authority (MDA) via a Program Deviation Report when the PM's current estimate exceeds one or more APB threshold value for cost, schedule, and/or performance.
Only the MDA can approve a revision to the APB. Before undertaking revisions to an APB for a Major Defense Acquisition Program (MDAP), consultation with office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD(AT&L))—specifically the office of Acquisition Resources and Analysis (ARA)—and the Overarching Integrated Product Team leader is recommended.
For MDAPs, both "original" and current APBs are maintained. The original APB cost estimate may be revised only if a breach occurs that exceeds the critical unit cost threshold for the program. The "critical" unit cost threshold, as it relates to the original APB, is defined to be an increase of at least 50 percent over the original Program Acquisition Unit Cost (PAUC) or the original Average Procurement Unit Cost (APUC) for the program. The "critical" unit cost threshold, as it relates to the current APB, is defined to be an increase of at least 25 percent over the current PAUC or current APUC for the program.
For MAIS programs, only a current APB is maintained, but the Original Estimate reported in the MAIS Annual Report (MAR) serves a similar purpose as an Original APB Baseline. (The MAR Original Estimate unlike the APB can be revised only after a Critical Change Report has been submitted to Congress. MAIS Critical Change thresholds are: cost parameter (Total Acquisition Cost or Total Lifecycle Cost) 25 percent or greater, schedule parameter of 12 months or greater, or failure to meet a key performance threshold.)
For both MDAP and MAIS programs, the current APB shall be revised at major milestone decisions, and at the full-rate production decision (full deployment decisions for MAIS). Other than these occasions, a revision to the current APB may be considered only at the discretion of the MDA and only if the revision is a result of a major program restructure that is fully funded and approved by the MDA, or that occurs as a result of a program deviation (breach), that is primarily the result of external causes beyond the control of the PM. A revision to the current APB shall not be authorized if it is proposed merely to avoid a reportable breach. The determination of whether to revise the APB will be made by the MDA.
For MDAPs, a "critical" unit cost breach triggers the section 2433a of title 10, United States Code (a.k.a "Nunn-McCurdy") certification process. In that case, both the current and original APBs shall be revised to reflect the same new APB values, assuming the program is certified. For MAIS programs, a Critical Change triggers the similar process implementing section 2445c of title 10, United States Code.
The APB is a key management document which establishes the approved program's objective and threshold boundaries, and links cost, schedule and performance parameters. The Program Manager (PM) manages the program within that trade space.
Cost figures should reflect realistic cost estimates of the total program and/or increment. Budgeted amounts should equal the total cost objectives in the APB. As the program progresses, the PM can refine procurement costs based on contractor actual (return) costs from Technology Development, Engineering and Manufacturing Development, and Low-Rate Initial Production.
The cost parameters of Acquisition Category (ACAT) IA programs are the same as those for ACAT I programs as noted in the next paragraph with the addition of Defense Working Capital Funds and Other Funding.
The APB should contain cost parameters (objectives and thresholds) for major elements of program life-cycle costs (or total ownership costs), as defined in Chapter 3.
These elements include:
The objective parameters for cost are presented in both base-year and then-year dollars. The threshold parameters for cost are only presented in base-year dollars.
Schedule parameters should include, as a minimum, the projected dates for major decision points (such as Milestone A, Milestone B, Milestone C, Full Rate Production, and the system-level Preliminary Design Review and Critical Design Review), major testing events, and Initial Operational Capability. To be consistent with Chapter 144A of title 10, United States Code, the schedule parameters for Major Automated Information System programs should include: the dates of the Milestone A decision (or MDA approval of the preferred alternative if there was no Milestone A), the objective and threshold dates for Milestone B, Milestone C, Full Deployment Decision, and Full Deployment. If Milestones A, B and/or C are tailored out, the APB shall state the rationale for the tailoring. Full Deployment dates should be identified as “TBD” until the Full Deployment Decision ADM is signed.
The Full Deployment Decision ADM shall establish the Full Deployment objective and threshold dates, define an identifiable Full Deployment, and designate the acquisition official who will declare Full Deployment in writing. When Full Deployment is declared, the PM shall notify the MDA.
The PM may propose, and the MDA may approve, other, specific, critical, and system events.
APB performance parameters should include the key performance parameters identified in the capability needs document(s) (i.e., Capability Development Document (CDD) and Capability Production Document (CPD)), and the values and meanings of objectives and thresholds should be consistent between the APB and the capability document. (See also CJCS Instruction 3170.01H) The number and specificity of performance parameters may change over the lifecycle of the acquisition, primarily at major milestones. At Milestone B (Engineering & Manufacturing Development decision), the APB should reflect the defined, operational-level measures of effectiveness or measures of performance to describe needed capabilities, minimally reflecting the CDD. As a program matures, system-level requirements may become better defined. Approaching the MS C decision, the APB should reflect the CPD. The MDA may also add performance parameters to the APB other than the Joint Requirements Oversight Council (JROC)-validated Key Performance Parameters.
OSD staff will review and comment on APBs for ACAT ID and IAM, Special Interest programs, and other programs designated by the Defense Acquisition Executive. The Joint Staff (J-8) will review the cost, schedule, and key performance parameter objective and threshold values in the APB for JROC Interest programs, and any other programs of significant joint interest (as determined by the J-8). The J-8 review will ensure that the objective and threshold values are consistent with the JROC-approved CDD, CPD, and prior JROC decision(s). The review will also ensure that the baseline provides the necessary warfighting capabilities affordably and within required time frames. (See also the CJCS Instruction 3170.01H and the January 19, 2012 JCIDS Manual.)
Evolutionary acquisition is a frequently used Department of Defense (DoD) strategy for rapid acquisition of mature technology for the user. An evolutionary approach delivers capability in militarily useful increments, recognizing, up front, the need for future capability improvements.
Programs using an evolutionary acquisition strategy should design the APB consistent with the sponsor's capability document(s) and the applicable example approaches outlined in Table 10.9.4.T1.
Table 10.9.4.T1. APB Parameters under an Evolutionary Acquisition Strategy
CDD or CPD
APB
Capability Development Document (CDD) defines multiple increments of capability (CDD should assign each capability to a specific increment)
A separate APB for each increment
A separate CDD for each Increment
There is one Capability Production Document (CPD) for each production increment
The corresponding APB should be updated to reflect the parameters in the CPD for that production increment
DoD Instruction 5000.02 requires the Milestone Decision Authority (MDA) to formally initiate each increment of an evolutionary acquisition program. Program initiation for follow-on increments may occur at Milestone B or C. Therefore, the program manager should develop APB documented goals for each program increment or sub-program. An Increment is “a militarily useful and supportable operational capability that can be developed, produced, deployed, and sustained. Each Increment must have an Acquisition Program Baseline (APB) with its own set of threshold and objective values set by the user.” (DODI 5000.02, Encl.2, 2.c.) In the context of an IS acquisition, this means that both threshold and objective values for cost, schedule, and performance parameters must be established for each Increment.
When an MDAP requires the delivery of two or more categories of end items that differ significantly in form and function, subprograms may be established for baseline development and reporting purposes. Section 2430A of title 10, United States Code stipulates that when one subprogram is designated within an MDAP, all remaining elements (increments or components) of the program shall also be appropriately organized into one or more other subprograms.
The decision whether to establish subprograms for an MDAP requires careful analysis and must be made on a case-by-case basis. Structuring an MDAP with subprograms should reflect the way the program is being managed, and represent the most efficient and informative way to convey information about a program to senior defense acquisition officials as well as to the Congress.
The law requires that the congressional defense committees be notified in writing of any proposed subprogram designation not less than 30 days before the date such designation takes effect. The approval of an APB reflecting such designation will be considered the date that subprogram designation takes effect; therefore, notification to Congress must occur not less than 30 days before a subprogram APB is approved. Accordingly, DoD Components must notify the Director, Acquisition Resources and Analysis of all proposed APBs that reflect new or revised subprogram designation at least 60 days before the proposed APB is submitted to the Milestone Decision Authority for approval.
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