3.0. Overview
3.0.1. Purpose
3.0.2. Contents
3.0.1. Purpose
This chapter addresses acquisition program affordability and resource estimation. It provides explanations of the Office of the Secretary of Defense’s Office of Cost Assessment and Program Evaluation’s (CAPE’s) policies and procedures as well as information required by DoD Instruction 5000.02, Operation of the Defense Acquisition System. DoD Instruction 7000.14 establishes DoD 7000.14-R as the DoD-wide financial management regulation (FMR) to be used by all DoD Components for accounting, budgeting, finance, and financial management education and training. The link to the FMR is provided as a convenience to the reader.
3.0.2. Contents
Section 3.1 provides introductory background material intended for a general audience. It describes the concept of program life-cycle cost, and provides definitions of terms used by the DoD cost community. It also introduces the concepts of total ownership cost and fully burdened cost of delivered energy.
The next five sections are more specialized; they discuss the specific milestone review procedures, expectations, and best practices for a variety of topics related to acquisition program affordability, cost, and manpower:
Section 3.2 describes the basic policies associated with the consideration of affordability in the acquisition process and offers parameters for preparing affordability analyses and constraints on investments. This section also explains the Department's full-funding policy.
Section 3.3 describes the Analysis of Alternatives process.
Section 3.4 describes the role of both DoD Component cost estimates and independent cost estimates in support of the DoD acquisition system.
Section 3.5 describes the review procedures for manpower estimates.
Section 3.6 discusses procedures unique to economic analyses of major automated information systems.
Section 3.7 is intended for less experienced cost analysts working in the acquisition community. This section, which is tutorial in nature, provides a recommended analytic approach for preparing a life-cycle cost estimate for a defense acquisition program.
DAG Tutorial 
