When the Senior Official anticipates or makes a determination that a Critical Change has occurred, the Senior Official should initiate a process to satisfy the statutory and regulatory requirements. This section describes those requirements and sets forth a model process.

10.11.5.1. Critical Change Thresholds

A Critical Change is defined as one in which any of the following has occurred:

The system failed to achieve a full deployment decision (FDD) within 5 years after the Milestone A decision or if no Milestone A then the date when the preferred alternative was selected and approved by the Milestone Decision Authority (this threshold is more fully explained in section 10.11.5.2, below);
There has been a schedule change that will cause a delay of one year or more in any program milestone or significant event from the schedule originally submitted to Congress in the Major Automated Information System (MAIS) Annual Report (MAR);
The estimated total acquisition cost or total life-cycle cost for the program has increased by 25 percent or more over the Original Estimate submitted to Congress in the MAR; or
There has been a change in the expected performance of the MAIS that will undermine the ability of the system to perform the functions anticipated at the time information on the program was originally submitted to Congress in the MAR. The Department has determined that a critical performance change is defined as a failure to meet a Key Performance Parameter threshold value.

10.11.5.2. Five-Year-to-Full Deployment Decision (FDD) Threshold

Major Automated Information System (MAIS) programs should be structured so that each Increment can achieve an FDD within five years from the Milestone A decision, or if there was no Milestone A decision, the date when the preferred alternative was selected and approved by the Milestone Decision Authority. The program structure and (upon sufficient maturity) the criteria that constitute a FDD, should be reflected in the Increment’s Acquisition Strategy and Acquisition Program Baseline.

10.11.5.2.1. Failed to Achieve a Full Deployment Decision (FDD)

The phrase "failed to achieve" is interpreted literally; i.e., the Increment must have actually exceeded (not expected to exceed) five years between start of the 5-year development clock and FDD. A breach of this threshold will therefore be reported in the Major Automated Information System (MAIS) Quarterly Report (MQR) next due after the 5-year point.

If, however, any other Critical Change is reported in advance of the 5-year point and it is expected that FDD will not occur within the 5-year threshold, include an additional determination of the 5-year-to-FDD breach in the evaluation and report to Congress. When the 5-year point arrives, re-send the same report to Congress with a transmittal letter indicating that "the previously reported certifications were meant to apply now."

If there is no reason to determine and report any Critical Change in advance of failure to achieve FDD within 5 years, such determination, evaluation, report, and certification will be accomplished after the 5-year point is reached in accordance with the first paragraph of this section.

For Acquisition Category III programs that are “graduating” to MAIS status and have achieved an FDD (no matter how long it took), that event has overcome the 5-year-to-FDD breach criterion, and it is no longer applicable. “Graduating” programs carry their program history with them (including the date the 5-year development clock was started).

10.11.5.2.2. Five-Year Development Clock Start/Stop Dates

The 5-year development clock starts when the automated information system or information technology investment is granted Milestone A approval for the program, or if there was no Milestone A decision, the date when the preferred alternative is approved by the Milestone Decision Authority (excluding any time during which program activity is delayed as a result of a bid protest).

Because schedule events and thresholds are expressed in whole months, the additional time to be added as a consequence of bid protest is calculated by dividing the bid protest time lost in days by 30 and rounding up to the next month. For example, if a bid protest was filed on October 26, 2011 and resolved on December 20, 2011 (53 days), the 5-year development clock would be extended two months (53/30=1.76 and rounded up to 2 months).

10.11.5.2.3. Full Deployment Decision (FDD) Date

With respect to a MAIS program, the “Full Deployment Decision” is the final decision made by the Milestone Decision Authority (MDA) authorizing an Increment of the program to deploy software for operational use. Each Increment can have only one FDD. The 5-year development clock stops when the MDA signs the FDD Acquisition Decision Memorandum.

If the Increment will have multiple partial deployments, the MDA should specifically designate which partial deployment decision will serve as the FDD for the entire Increment. At the MDA’s discretion and as specified in the Acquisition Strategy, a partial deployment would be appropriately designated as the FDD with an accumulation of successes related to the entire Increment, such as:

Low percentage of total functionality remains to be developed;
IOT&E indicates that the system is operationally effective, suitable, and survivable;
High percentage of capability fielded;
High percent of geographical fielding completed;
High percentage of legacy system(s) replaced;
Insignificant risk associated with remaining releases ; and
Achievement of Initial Operational Capability.

If the MDA has not formally specified which partial deployment will serve as the FDD, by default, the last partial deployment will be the FDD.

10.11.5.3. Program Evaluation to Inform a Critical Change Report

Upon determination of a Critical Change, the statute directs an evaluation ("E") of the program, including "an assessment of-

(E1) "the projected cost and schedule for completing the program if current requirements are not modified;
(E2) "the projected cost and schedule for completing the program based on reasonable modification of such requirements; and
(E3) "the rough order of magnitude of the cost and schedule for any reasonable alternative system or capability."

While not per se a part of the Critical Change Report that will be submitted to the congressional defense committees, these three "E" assessments will feed into the four certification ("C") areas of the Critical Change Report described below.

10.11.5.4. Report on Critical Program Changes

The statute further directs delivery of a report (i.e., Critical Change Report (CCR)) to the congressional defense committees, including: "a written certification (with supporting explanation) stating that-

(C1) "the automated information system or information technology investment to be acquired under the program is essential to the national security or to the efficient management of the Department of Defense;
(C2) "there is no alternative to the system or information technology investment which will provide equal or greater capability at less cost;
(C3) "the new estimates of the costs, schedule, and performance parameters with respect to the program and system or information technology investment, as applicable, have been determined, with the concurrence of the Director of Cost Assessment and Program Evaluation, to be reasonable; and
(C4) "the management structure for the program is adequate to manage and control program costs."

To avoid a prohibition on the obligation of funds for major contracts, the report must be submitted to the congressional defense committees not later than 60 days after the date the Major Automated Information System (MAIS) Quarterly Report (MQR) was due to the staff office of the Senior Official.

10.11.5.5. Model Critical Change Process

10.11.5.5.1. Critical Change Triage Team; Determination and Tasking

In anticipation of, or upon receipt of a Major Automated Information System Quarterly Report (MQR) containing notice of a Critical Change, the staff office of the Senior Official should organize a Triage Meeting to:

Review the nature and severity of the Change;
Recommend a tailored Critical Change process to the Senior Official; and
Outline the leadership structure and scope of the Critical Change Team (CCT) that will conduct the evaluation and prepare a Critical Change Report (CCR). See below for further advice on organizing the CCT and its several Integrated Product Teams (IPTs).

For Acquisition Category (ACAT) IAM programs, Triage Meeting attendees should be senior representatives from 1) the staff office of the Senior Official, 2) the office of the Joint Chiefs of Staff (J8,Force Structure Resources and Assessment), 3) the office of the Deputy Director, Program Evaluation (plus the office of the Deputy Director Cost Analysis if the Under Secretary (Acquisition, Technology and Logistics) is the Milestone Decision Authority), 4) the office of the Director, Acquisition Resources & Analysis, and 5) the OSD office with program oversight responsibility (Overarching Integrated Product Team, Investment Review Board, or equivalent).

For ACAT IAC programs, Triage Meeting attendees should be from analogous Component organizations.

The staff office will document the recommendations of the Triage Meeting in a draft Determination and Tasking memorandum to be signed by the Senior Official. The "Determination and Tasking" memorandum will:

State the Senior Official's determination and nature of the Critical Change;
Direct a program evaluation be conducted;
Direct a report of the results be prepared; and
Designate leadership of a Critical Change Team to manage the process.

10.11.5.5.2. Critical Change Team (CCT) and Meetings

As part of the "Determination and Tasking" memorandum, the Senior Official should establish leadership for a CCT to conduct the program evaluation and produce the Critical Change Report. A Team Leader from an appropriate oversight or program integration office under the Senior Official will organize the CCT and integrate the contributions of the several IPTs. The Team Leader should be an O-5/O-6 or equivalent civilian. If the magnitude of the program warrants it, a Flag/General Officer/Senior Executive Service-level "Integrated Product Team (IPT) Principals Lead" from the Senior Official's staff should be named to provide advice and direction to the CCT, as well as to chair meetings of a committee of "IPT Principals." Figure 10.11.5.5.2.F1. is a notional depiction of CCT Organization and Reporting Paths.

Figure 10.11.5.5.2.F1. Critical Change Team (CCT) Organization and Reporting Path

Ultimately, the Senior Official must be satisfied sufficiently with the evaluation and report to sign the certification statements required by the statute. When the Senior Official perceives the need to specify leadership or membership of individual IPTs, that specification should also be made as part of the "Determination and Tasking" memorandum. Otherwise, the IPT Principals Lead and Team Leader will select individual members and leadership of the IPTs that will focus on certifications C1-4. Membership should include all interested parties, and individuals must be empowered to represent their organizations. In all cases, IPT membership and leadership designations should consider joint/departmental interests as well as the circumstances of the Critical Change.

A kickoff meeting of the CCT should be held as soon as possible in anticipation of a Critical Change being determined. The IPT Principals Lead and CCT Leader should guide the organization of the CCT into IPTs and specify expected contributions and a detailed timeline. The CCT (or the Team Leader alone) should meet again with the IPT Principals Lead as necessary, and at least once for a mid-process progress check. Eventually, the CCT should meet to pre-brief the IPT Principals Lead on the final Report. The final Report and briefing should then be presented to the IPT Principals for a final review of the Report before delivery to the Senior Official for certification (signature).

10.11.5.5.3. Critical Change Integrated Product Teams (IPT) Membership and Focus

The Critical Change process should be conducted by IPTs under the Critical Change Team (CCT), each focused on Certifications 1-4. To preserve IPT and CCT independence to the maximum extent practicable, team membership should be independent of the Program Management Office (PMO). IPT membership should be selected to maximize the success of the group and avoid non-productive contributions. For Acquisition Category (ACAT) IAM programs, IPT membership is suggested below. For ACAT IAC programs, the IPT membership representatives should be from analogous Component organizations plus the appropriate OSD organizations.

IPT C1 will document the explanation that permits the Senior Official to certify "the automated information system or information technology investment to be acquired under the program is essential to the national security or to the efficient management of the Department of Defense." The IPT C1 should write a few paragraphs about the need for the program:
- Include threat, mission, and current systems available to meet the threat or efficient management need.
- Reference relevant strategy documents, Concept of Operations (CONOPS), roadmaps, requirements documents, threat assessments, Quadrennial Defense Review, etc.
- Address the program and the capability to be acquired, as appropriate.
- IPT C1 members: Component operations staff, Program Executive Officer (PEO) staff, Component Acquisition Executive (CAE) staff, user representatives, Program Manager (PM), Joint Chiefs of Staff (JCS)/J8, Office of the Secretary of Defense (OSD) (Principal Staff Assistant (PSA) and the Overarching Integrated Product Team (OIPT) acquisition analysts).
IPT C2 will document the explanation that permits the Senior Official to certify that "there is no alternative to the system or information technology investment which will provide equal or greater capability at less cost." This IPT should:
- Reference any existing Analysis of Alternatives (AoA) and discuss any major deviations from past analysis. Do not re-accomplish the AoA.
- Identify any alternative systems.
- Include the assessment (E3) of the "rough order of magnitude of the cost and schedule for any reasonable alternative system or capability."
- IPT C2 members: Component operations staff, user representatives, Component & program office cost estimators, PM, CAE and PEO staff; JCS/J8; OSD (PSA; Office of the Deputy Director, Program Evaluation; and OIPT acquisition analyst).
As indicated in Figure 10.11.5.5.2.F1, above, IPT C3 is responsible for assessing E1 and E2, forming conclusions thereupon, and recording an explanatory statement that permits the Senior Official to certify "the new estimates of costs, schedule, and performance parameters with respect to the program and system or information technology investment, as applicable, have been determined, with the concurrence of the Director of Cost Assessment and Program Evaluation (D, CAPE), to be reasonable." This IPT should:
- Identify changes that have occurred to the program's requirements.
- Summarize acquisition and total life-cycle cost growth from the Original Estimate. Display changes in constant (BY) and current (TY) dollars.
- Include rationale for growth such as technical uncertainties/corrections or changes in inflation, requirements, escalation outlay, quantity, schedule, budget, or estimating errors.
- Include the assessment (E1) about the "projected cost and schedule for completing the program if current requirements are not modified."
- Include the assessment (E2) about "projected cost and schedule for completing the program based on reasonable modification of ... requirements."
- Update the cost estimate and milestone schedule
- Develop a draft Acquisition Program Baseline for management approval concurrent with the Critical Change Report. The Original Estimate status is explained in 10.11.7.1.
- IMPORTANT: In addition to concurrence, an independent cost estimate by D, CAPE) may also be required. See 10.11.7.2 and 10.5.1. Independent Cost Estimates for further explanation.
- IPT C3 members: Component operations staff, user representatives, Component & program office cost estimators, PM, CAE and PEO staff; JCS/J8; OSD (PSA; Office of the Deputy Director, Cost Assessment; OIPT acquisition analyst).
IPT C4 will document the explanation that permits the Senior Official to certify "the management structure for the program is adequate to manage and control program costs." The IPT C4 should:
- Review PMO and contractor management structures.
- Conduct site visits if the IPT Principal Lead determines they would be useful.
- Re-examine recent program oversight reviews and recommendations to appraise the degree and success of implementation.
- Develop a draft Acquisition Decision Memorandum for the MDA to direct corrective actions.
- IPT C4 members: CAE and PEO staff; PM; OSD (Office of the Assistant Secretary of Defense (Research and Engineering) (ASD(R&E)); Offices of the Deputy ASD (Developmental Test & Evaluation) and the Deputy ASD (Systems Engineering), Office of the Director, Defense Procurement and Acquisition Policy, Office of the DoD Chief Information Officer; and the OIPT acquisition analyst).

Table 10.11.5.5.3.T1 summarizes recommended IPT membership.

Table 10.11.5.5.3.T1. Summary of Recommended IPT Membership

IPT	C1	C2	C3	C4
Organization	essential	no alternative	new estimate	management
PMO/PM (as required)	X	X	X	X
PMO Cost/Finance		X	X
PEO Staff		X	X	X
CAE Staff	X	X	X	X
Component Operations Staff	X	X	X
User Representatives	X	X	X
JCS/J8	X	X	X
OSD Acquisition Analyst	X	X	X	X
DASD(SE)				X
DASD(DT&E)				X
AT&L(DPAP)				X
OSD CAPE		X	X
OSD PSA	X	X	X	X
DoD CIO				X

10.11.5.5.4. Critical Change Process Calendar

Figure 10.11.5.5.4.F1. portrays a typical Critical Change process calendar and shows the general flow of events described in 10.11.5.5.

Figure 10.11.5.5.4.F1. Critical Change Process Calendar

10.11.5.5.5. Critical Change Report (CCR)

The Critical Change Report is envisioned to be a document of about six pages: a two-page letter offering a succinct introduction/background on the program and the events that led to the Critical Change that contains the required certifications and one page each for the explanations provided by the Integrated Product Teams (IPTs) C1-4. The IPT C1-4 sections include an outline of corrective actions that will be taken to add discipline to program execution and avoid repeated deviation from the new Original Estimate. Example CCRs are available.

In most cases, an Acquisition Decision Memorandum and Acquisition Program Baseline will also be required to direct the actions cited in the CCR.

In case of an audit, it is important for the Component to keep all records used to prepare the CCR.

10.11.5.6. Coordination and Transmittal of a Critical Change Report (CCR) to the Congressional Defense Committees

In accordance with section 2445c(d)(1)(B) of title 10, United States Code, CCRs must be sent "through the Secretary of Defense, to the congressional defense committees." In cases where the Senior Official is an individual within OSD, this will be inherent in the CCR coordination and signature process.

In cases where the Senior Official is not an individual within OSD, the CCR shall be signed by the Senior Official and provided to the cognizant OSD official for transmittal to Congress. The signed CCR should be provided to the appropriate OSD official with draft Transmittal Letters addressed to the congressional defense committees no later than 5 working days before expiration of the 60-day period.

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