Periodic reports include only those reports required by statute or the Milestone Decision Authority (MDA). Except for the reports outlined in this section, the MDA tailors the scope and formality of reporting requirements.

10.10.1. Statutory Reporting for Major Defense Acquisition Programs (MDAPs)

10.10.1.1. Revised MDAP Definition

P. L. 111-23, “Weapons Systems Acquisition Reform Act of 2009,” May 22, 2009, amended section 2430 of title 10 United States Code, revising the definition of a Major Defense Acquisition Program (MDAP) as follows. A MDAP is a DoD acquisition program that is not a highly sensitive classified program and:

(1) That is designated by the USD(AT&L) as a MDAP; or

(2) That is estimated to require an eventual total expenditure for research, development, test, and evaluation of more than $365 million (based on fiscal year 2000 constant dollars) or an eventual total expenditure for procurement, including all planned increments or spirals, of more than $3.19 billion (based on fiscal year 2000 constant dollars).

For the purposes of establishing a program as an MDAP, the following, as applicable, shall be considered:

(1) The estimated level of resources required to fulfill the relevant joint military requirement as determined by the JROC, pursuant to section 181 of title 10 United States Code;

(2) The cost estimate referenced in section 2366a(a)(4) of title 10 United States Code;

(3) The cost estimate referenced in section 2366b(a)(1)(C) of title 10 United States Code; and

(4) The cost estimate within a baseline description as required by section 2435 of title 10 United States Code.

10.10.1.2. Designation of Subprograms within Major Defense Acquisition Programs (MDAPs)

The National Defense Authorization Act (NDAA) for FY 2009 amended section 2430 of title 10 United States Code to give the Department authority to designate subprograms within MDAPs.

The Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) (as delegated by the Secretary of Defense) may designate subprograms within an MDAP. That is, 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 base-lining and reporting purposes. The law 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 subprograms.

In the DoD acquisition environment, there are two primary instances when establishing subprograms within an MDAP may be advisable:

The first instance is a product of evolutionary acquisition when increments or blocks of capability are acquired in a sequential manner. With subprogram reporting, each of these increments can be baselined and tracked separately for cost (including unit cost), schedule, and performance purposes within a single MDAP without the risk of artificial cost growth or a critical cost (a.k.a, Nunn-McCurdy) breach occurring when a subsequent increment is initiated. In accordance with DoDI 5000.02, each evolutionary increment must have its own Milestone B (or Milestone C, if initiated at production) and its own Acquisition Program Baseline (APB). The requirement for a separate APB for each evolutionary increment is satisfied through the establishment of an APB containing subprograms. An example of this type of subprogram is the block upgrade of a missile system that provides significant increases in altitude and/or range.
The second instance is when there are major components of a program that are dissimilar and therefore cannot be combined in a rational way to produce a unit cost that is representative of the program. An example is the use of separate subprograms for satellites and ground-based receivers to improve visibility and unit cost reporting.

The decision whether to establish subprograms within 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 Congress. For Acquisition Category (ACAT) ID MDAPs, the Defense Acquisition Executive will approve the designation of subprograms based on recommendations from the Overarching Integrated Product Team (OIPT). For ACAT IC MDAPs, the authority to designate subprograms is delegated to the respective DoD Component Milestone Decision Authority (MDA). In either case, the recommendations from the OIPT or the MDA’s staff should also include appropriate guidance on how the relevant statutory and regulatory requirements of DoD Instruction 5000.02 should apply at the subprogram or program level (for example, how to structure the acquisition strategy or the independent cost estimate for a program with designated subprograms).

10.10.1.2.1. Subprogram Notification

The law requires that the Secretary of Defense (as delegated to the Under Secretary of Defense (Acquisition, Technology, and Logistics) must notify the congressional defense committees in writing of any proposed subprogram designation not less than 30 days before the date such designation takes effect. The approval of an Acquisition Program Baseline (APB) reflecting such designation will be considered the date that the 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 designations at least 60 days before the proposed APB is submitted to the Milestone Decision Authority for approval. Once a subprogram structure is established for a Major Defense Acquisition Program, the Defense Acquisition Executive Summary , Selected Acquisition Report, and Unit Cost Reports (quarterly and breach) will reflect that subprogram structure.

10.10.1.2.2. Subprogram Critical Cost Growth

In the event a subprogram experiences critical unit cost growth, the certification required for the program to continue shall be made at the program level—not the subprogram level.

10.10.1.2.3. Prohibition on Obligations (Subprograms)

The prohibition on obligations until the submission of the Selected Acquisition Report (SAR) for significant breaches, and the certification for critical breaches, will affect all major contracts of the program, not just those relating to the subprogram that breached.

10.10.1.3. Acquisition Program Baseline (APB) Reporting

10.10.1.3.1. Program Deviations

The Program Manager (PM) must maintain a current estimate of the program being executed (see definition of "current estimate" in section 10.10.1.3.2). The PM must immediately notify the Milestone Decision Authority when a baseline deviation occurs based upon the current estimate. A baseline deviation occurs when the current estimate is greater than the threshold. (See section 2433 of title 10 United States Code)

10.10.1.3.2. Current Estimate

The current estimate is the latest estimate of program acquisition cost and quantity, schedule milestone dates, performance characteristic values, and critical technical parameters of the approved program (i.e., the approved program as reflected in the currently approved Acquisition Program Baseline (APB), Acquisition Decision Memorandum, or in any other document containing a more current decision of the Milestone Decision Authority (MDA) or other approval authority). For cost, the current estimate is normally the President's Budget plus or minus known changes; for schedule, it is normally the program manager's best estimate of current schedule milestone dates; for performance it is normally the program's manager's best estimate of current performance characteristics values.

Program Managers (PMs) will report the current estimate of each APB parameter periodically to the MDA. PMs will report current estimates for ACAT I and IA programs quarterly in the Defense Acquisition Executive Summary. For all other programs, the cognizant MDA will direct the reporting frequency.

10.10.1.3.3. Program Deviation Reporting

When the Program Manager (PM) has reason to believe that the current estimate for the program indicates that a performance, schedule, or cost threshold value will not be achieved, he or she will immediately notify the Milestone Decision Authority (MDA) of the deviation. Within 30 days of the occurrence of the program deviation, the PM will submit a Program Deviation Report to the MDA providing the reasons for the program deviation and a recommendation for the actions that need to be taken to bring the program back within the baseline parameters (if this information was not included with the original notification). Within 90 d days of the occurrence of the program deviation, one of the following should have occurred: the program is back within Acquisition Program Baseline (APB) parameters; or an OIPT-level or equivalent Component-level review has been conducted to review the program and make recommendations to the MDA regarding the parameters that were breached. The MDA will decide, based on criteria in sections 2433 and 2435 of title 10 United States Code, whether it is appropriate to approve a revision to the APB. (Generally, APB changes will only be approved in conjunction with a major milestone decision or as a result of a critical cost (a.k.a. Nunn-McCurdy) breach. In limited circumstances, the MDA may choose to approve a change to the current APB as a result of a major program restructure that is fully funded, or as a result of a program deviation--if the breach is primarily the result of external causes beyond the Program Manager’s control. A revision to the current APB will not be authorized if it is proposed merely to avoid a reportable breach.

If one of the above actions has not occurred within 90 days of the program deviation, the MDA should hold a formal program review to determine program status and the way ahead.

10.10.1.4. Selected Acquisition Report (SAR) Requirement

In accordance with section 2432 of tile 10, United States Code, the Secretary of Defense (as delegated to the Under Secretary of Defense (Acquisition, Technology, and Logistics shall submit a SAR to Congress for all Major Defense Acquisition Programs (MDAPs). The Program Manager will use the Defense Acquisition Management Information Retrieval system SAR module application to prepare the SAR.

10.10.1.4.1. Selected Acquisition Report (SAR) Content and Submission

A SAR provides Congress with the status of total program cost, schedule, and performance, as well as program unit cost and unit cost breach information for a specific program. Each SAR will also include a full life-cycle cost analysis for the reporting program, each of its evolutionary increments, as available, and for its antecedent program, if applicable. Required content for a SAR is defined in section 2432 of title 10 United States Code and is reflected in the SAR module of the Defense Acquisition Management Information System by which the SAR information is entered and submitted electronically.

The SAR for the quarter ending December 31 is the annual SAR. The Program Manager (PM) will submit the annual SAR within 45 days after the President transmits the following fiscal year's budget to Congress. Annual SARs will reflect the President's Budget and supporting documentation. The annual SAR is mandatory for all ACAT I programs.

The PM will submit quarterly exception SARs for the quarters ending March 31, June 30, and September 30 not later than 45 days after the quarter ends. Quarterly SARs are reported on an exception basis, as follows:

The current estimate exceeds the Program Acquisition Unit Cost (PAUC) objective or the Average Procurement Unit Cost (APUC) objective of the currently approved Acquisition Program Baseline (APB) in base-year dollars by 15 percent or more;
The current estimate exceeds the PAUC or APUC objective of the original APB in base-year dollars by 30 percent or more.
The current estimate includes a 6-month, or greater, delay for any schedule parameter that occurred since the current estimate reported in the previous SAR;
Milestone B or Milestone C approval occurs within the reportable quarter.

Quarterly exception SARs will report the current estimate of the program for cost, schedule, and performance (see definition of current estimate in section 10.10.1.3.2. above). Pre-Milestone B programs may submit Research, Development, Test, and Evaluation (RDT&E)-only reports, excluding procurement, military construction, and acquisition-related operations and maintenance costs. Department of Defense Components must notify the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) of the names of the programs for which they intend to submit RDT&E-only SARs 30 days before the reporting quarter ends. The USD(AT&L) must also notify Congress 15 days before the reports are due.

Whenever the USD(AT&L) proposes changes to the content of a SAR, he or she must submit notice of the proposed changes to the Armed Services Committees of the Senate and House of Representatives. The USD(AT&L) may consider the changes approved, and incorporate them into the SAR, 60 days after the committees receive the change notice.

Per section 2433(c)(2) of title10, United States Code, for any Major Defense Acquisition Program (MDAP) certified subsequent to a critical cost breach, the first SAR for the program submitted after the President submits a budget in the calendar year following the year in which the program was restructured must include a description of all funding changes made as a result of the growth in cost of the program, including reductions made in funding for other programs to accommodate such cost growth.

Per section 2366b of title 10, United States Code, the SAR for any MDAP receiving a waiver for one or more Milestone (MS) B certification criteria must prominently and clearly indicate that such program has not fully satisfied the certification requirements for MS B, until such time that the Milestone Decision Authority makes a determination that the program has satisfied all such certification requirements.

10.10.1.4.2. Selected Acquisition Report (SAR) Waivers

In accordance with section 2432 of title 10, United States Code, the Secretary of Defense may waive the requirement for submission of a SAR for a program for a fiscal year if:

The program has not entered Engineering and Manufacturing Development;
A reasonable cost estimate has not been established for the program; and,
The system configuration for the program is not well defined.

As delegated by the Secretary of Defense, the Under Secretary of Defense (Acquisition, Technology, and Logistics) will submit a written notification of each waiver for a fiscal year to the Armed Services Committees of the Senate and House of Representatives not later than 60 days before the President submits the budget to Congress, pursuant to section 1105 of title 31, United States Code in that fiscal year.

10.10.1.4.3. Selection Acquisition Report (SAR) Termination

The Under Secretary of Defense (Acquisition, Technology, and Logistics) will consider terminating reporting of SAR data when 90 percent of expected production deliveries or planned acquisition expenditures have been made, or when the program is no longer considered an ACAT I program in accordance with section 2432 of tile 10, United States Code.

10.10.1.5. Unit Cost Reports (UCR)

In accordance with section 2433 of title 10, United States Code, the Program Manager will prepare UCRs for all ACAT I programs submitting Selected Acquisition Reports, except pre-Milestone B programs that are reporting Research, Development, Test & Evaluation costs only.

10.10.1.5.1. Unit Cost Report (UCR) Content and Submission

The Program Manager (PM) will report the unit costs of the program to the Component Acquisition Executive on a quarterly basis through the electronic Defense Acquisition Executive Summary (DAES) submission process. The PM will submit the update in accordance with DAES submission procedures. Reporting will begin with submission of the initial Selected Acquisition Report (SAR), and terminate with submission of the final SAR. Content of the unit cost report is specified in section 2433 of title 10, United States Code.

Each report will include:

The program acquisition unit cost for the program (or for each designated major subprogram under the program).
In the case of a procurement program, the current estimate of the Program Acquisition Unit Cost and the Average Procurement Unit Cost (in base-year dollars) for the program (or for each designated major subprogram under the program);
Any earned value management cost and schedule variances, for each of the major contracts since entering the contract;
Any changes from program schedule milestones or program performances reflected in the baseline description established under section 2435 of title 10, United States Code that are known, expected, or anticipated by the program manager.
Any significant changes in the total program cost for development and procurement of the software component of the program or subprogram, schedule milestones for the software component of the program or subprogram, or expected performance for the software component of the program or subprogram that are known, expected, or anticipated by the program manager.

10.10.1.5.1.1. Unit Cost Reporting (UCR) for the Software Component of a Major Defense Acquisition Program (MDAP)

Section 2433(b)(5) of title 10, United States Code requires reporting of “any significant changes in the total program cost for development and procurement of the software component of the program or subprogram, schedule milestones for the software component of the program or subprogram, or expected performance for the software component of the program or subprogram that are known, expected, or anticipated by the program manager.”

This is essentially a requirement to separately establish a cost and schedule baseline for the “software component” of a MDAP program or subprogram. However the definition of “software component” is not defined in the statute. Therefore, in the context of unit cost reporting, the definition of “software development element” for the Software Resources Data Report (SRDR) (see DoDI 5000.02, Enclosure 4, Table 4 “Regulatory Contract Reporting Requirements) is used as the proxy for “software component” referenced in the statute. (Reporting of software efforts above $20M is required for the purposes of SRDRs as defined in DoD 5000.04-M-1.)

Under this reporting framework, the Initial Government Report (IGR) and/or the contractor’s Initial Developer Report (IDR) should be used as the baselines to develop a cost and schedule “software component” estimate. (The IGR and IDR are established within 120 days of the contract award, or within 60 days of beginning a software release, and are updated at the completion of a software increment to reflect the actual resources incurred). Note that the SRDR includes only software resource requirements (staffing and schedule), not cost explicitly. However, PMs can, and should, use these parameters to compute a cost estimate.

The PM’s software component estimate must be documented in the Acquisition Program Baseline and used as the basis for determining whether there are “any significant changes in the total program cost for development and procurement of the software component of the program or subprogram, schedule milestones for the software component of the program or subprogram, or expected performance for the software component of the program or subprogram that are known, expected, or anticipated by the program manager.” Any such changes must be addressed in the UCR.

Any PM with an APB for an MDAP (or its subprogram) that does not currently include a software component estimate must complete the estimate and report it in the unit cost portion of the next program (or subprogram) SAR. A footnote must be included to indicate that this estimate will be the baseline against which future change in the software component cost will be compared.

10.10.1.5.2. Unit Cost Report (UCR) Breach Reporting

If the program manager of a major defense acquisition program determines at any time during a quarter that there is reasonable cause to believe that the Program Acquisition Unit Cost for the program (or for a designated major subprogram under the program) or the Average Procurement Unit Cost for the program (or for such a subprogram), as applicable, has increased by a percentage equal to or greater than the significant cost growth threshold or the critical cost growth threshold, the breach must be reported in accordance with section 2433 of title 10 United States Code.

When one or more problems with the software component of the Major Acquisition Defense Program, or any designated major subprogram under the program, has significantly contributed to the increase in program unit costs, the action taken and proposed to be taken to solve such problems must also be included in the Selected Acquisition Report (SAR). The only exception to that requirement occurs when a program acquisition unit cost increase or a procurement unit cost increase for a major defense acquisition program or designated major subprogram results in a termination or cancellation of the entire program or subprogram.

10.10.1.5.2.1. Significant Cost Growth Notification Requirements

The Program Manager will notify the Component Acquisition Executive (CAE) immediately, whenever there is a reasonable cause to believe that the current estimate of either the Program Acquisition Unit Cost (PAUC) or Average Procurement Unit Cost (APUC) (in base-year dollars) of a Major Defense Acquisition Program, or designated subprogram, has increased by at least 15 percent over the PAUC or APUC objective of the currently approved Acquisition Program Baseline (APB), respectively, or has increased by at least 30 percent over the PAUC or APUC of the original/revised original APB.

If the CAE determines that there is an increase in the current estimate of the PAUC or APUC objective of at least 15 percent over the currently approved APB, or an increase of at least 30 percent over the original APB, the CAE, based on the PM’s notification, shall inform the cognizant Head of the DoD Component of this determination. If the cognizant Head of the DoD Component subsequently determines that there is, in fact, an increase in the current estimate of the PAUC or APUC of at least 15 percent over the currently approved APB, or an increase in the current estimate of the PAUC or APUC of at least 30 percent over the original APB, the Head of the DoD Component will notify Congress, in writing, of the determination of a significant cost breach. The notification will be made not later than 45 days after the end of the quarter, in the case of a quarterly report; or not later than 45 days after the date of the report, in the case of a report based on reasonable cause. In either case, notification will include the date that the Head of the DoD Component made the determination. In addition, the Head of the DoD Component will submit a Selected Acquisition Report (SAR) for either the fiscal year quarter ending on or after the determination date, or for the fiscal year quarter that immediately precedes the fiscal year quarter ending on or after the determination date. This SAR shall contain the additional, breach-related information.

The cognizant Head of the DoD Component shall also inform the Under Secretary of Defense (Acquisition, Technology, and Logistics) of the significant cost breach determination not later than five working days prior to submitting the congressional notification.

10.10.1.5.2.2. Critical Cost Breach Certification Requirements

Per section 2433a of title 10 United States Code, the Program Manager shall notify the Department of Defense Component Acquisition Executive (CAE) immediately, whenever there is a reasonable cause to believe that the current estimate of either the Program Acquisition Unit Cost (PAUC) or Average Procurement Unit Cost (APUC) objective of a Major Defense Acquisition Program (MDAP),, or designated subprogram (in base-year dollars) has increased by at least 25 percent over the PAUC or APUC objective of the currently approved Acquisition Program Baseline (APB) estimate, or at least 50 percent over the PAUC or APUC objective of the original/revised original APB (aka “Nunn-McCurdy” breach).

If the CAE determines that there is an increase in the current estimate of the PAUC or APUC objective of at least 25 percent over the currently approved APB, or an increase in the current estimate of PAUC or APUC objective of at least 50 percent over the original APB, the CAE, based upon the PM’s notification shall inform the cognizant Head of the DoD Component of this determination. If the cognizant Head of the DoD Component subsequently determines that there is, in fact, an increase in the current estimate of the PAUC or APUC of at least 25 percent over the currently approved APB, or an increase in the PAUC or APUC of at least 50 percent over the original APB, the Head of the DoD Component shall notify Congress, in writing, of the determination of a critical cost breach. The notification shall be not later than 45 days after the end of the quarter, in the case of a quarterly report; or not later than 45 days after the date of the report, in the case of a report based on reasonable cause. In either case, notification shall include the date that the Head of the DoD Component made the determination. In addition, the Head of the DoD Component shall submit a Selected Acquisition Report (SAR) for either the fiscal year quarter ending on or after the determination date, or for the fiscal year quarter that immediately precedes the fiscal year quarter ending on or after the determination date. This SAR shall contain the additional critical cost breach-related information.

The cognizant Head of the DoD Component shall also inform the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) of the critical cost breach determination not later than five working days prior to submitting the congressional notification.

Per section 2433a of title 10, United States Code the USD(AT&L), after consultation with the Joint Requirements Oversight Council regarding program requirements, shall determine the root cause or causes of the critical cost growth in accordance with applicable statutory requirements and DoD policies, procedures, and guidance based upon the root cause analysis conducted by the Director, Performance Assessments and Root Cause Analyses (DPARCA); and in consultation with the Director, Cost Assessment and Program Evaluation (DCAPE), shall carry out an assessment of:

The projected cost of completing the program if current requirements are not modified;
The projected cost of completing the program based on reasonable modification of such requirements;
The rough order of magnitude of the costs of any reasonable alternative system or capability; and
The need to reduce funding for other programs due to the growth in cost of the program.

After conducting the reassessment, the USD(AT&L) shall terminate the program unless the USD(AT&L) submits a written certification to Congress before the end of the 60-day period beginning on the day the SAR containing the unit cost information is required to be submitted to Congress. The certification must state:

The continuation of the program is essential to the national security;
There are no alternatives to the program that will provide acceptable capability to meet the joint military requirement (as defined in section 181 of title 10, United States Code) at less cost.
The new estimates of the PAUC or APUC have been determined by the DCAPE, to be reasonable;
The program is a higher priority than programs whose funding must be reduced to accommodate the growth in cost of the program; and
The management structure for the program is adequate to manage and control PAUC or APUC.

The written certification shall be accompanied by a report presenting the root cause analysis and assessment and the basis for each determination made in accordance with the five certification criteria listed above together with supporting documentation.

If the USD(AT&L) elects not to terminate a MDAP that has experienced critical cost growth, the USD(AT&L) shall:

Restructure the program in a manner that addresses the root cause or causes of the critical cost growth, as identified by the actions described above, and ensure that the program has an appropriate management structure as set forth in the written certification;
Rescind the most recent milestone approval for the program or designated subprograms and withdraw any associated certification(s) pursuant to section 2366a or 2366b of title 10, United States Code;
Require a new milestone approval for the program or designated subprograms before taking any contract action to enter a new contract, exercise an option under an existing contract, or otherwise extend the scope of an existing contract under the program, except to the extent determined necessary by the MDA, on a non-delegable basis, to ensure that the program can be restructured as intended by the Secretary of Defense without unnecessarily wasting resources.; and
Include in the report a description of all funding changes made as a result of the growth in cost of the program, including reductions made in funding for other programs to accommodate such cost growth. (The report specified here is the first SAR for the program submitted after the President submits a budget in the calendar year following the year in which the program was restructured.)

If, subsequent to a critical breach and based on a cost assessment and root cause analysis, the MDA determines that after eliminating the cost increase attributed to a quantity change the remaining increase to the PAUC is 5 percent or less to the current baseline and 10% or less to the original baseline, the following two requirements from section 2433a of title 10, United States Code may be waived:

Requirement to rescind the program's most recent milestone approval and associated MDA Milestone Certification Memorandum,
Requirement for a new milestone approval prior to contract actions.

This waiver is only applicable if the change in quantity was not made as a result of an increase in program cost, a delay in the program, or a problem meeting program requirements.

Additionally, for each MDAP that has exceeded the critical unit cost thresholds, but has not been terminated, the DPARCA shall conduct semi-annual reviews until 1 year after the date a new milestone approval is received. The DPARCA shall report the results of the semi-annual reviews to the USD(AT&L) and summarize the results in the Director's next annual report.

If an MDAP is terminated after experiencing a critical unit cost breach, the USD(AT&L) shall submit to Congress a written report with the following information:

An explanation of the reasons for terminating the program;
The alternatives considered to address any problems in the program; and
The course the Department of Defense plans to pursue to meet any continuing joint military requirements otherwise intended to be met by the program.

10.10.1.5.2.3. Restriction on Obligation of Funds

If the Head of the DoD Component makes a determination of either a Program Acquisition Unit Cost (PAUC) or Average Procurement Unit Cost (APUC) increase of at least 15 percent over the current Acquisition Program baseline (APB) or an increase of at least 30 percent over the original/revised original APB and a Selected Acquisition Report (SAR) containing the additional unit cost breach information is not submitted to Congress as required, or if the Head of the DoD Component makes a determination of either a PAUC or APUC increase of at least 25 percent over the current APB or at least 50 percent over the original/revised APB and a SAR containing the additional unit cost breach information and a certification by the USD(AT&L) is not submitted to Congress as required, funds appropriated for Research, Development, Test & Evaluation, procurement, or military construction may not be obligated for a major contract under the program.

A critical cost breach to the PAUC or APUC that results from the termination or cancellation of an entire program will not require a critical cost breach certification by the USD(AT&L).

10.10.1.6. Reporting Breaches of Milestone A Cost Estimates and Initial Operational Capability (IOC) Objectives

Section 2366a of title 10, United States Code requires the Milestone Decision Authority (MDA) to certify “that a cost estimate for the program has been submitted, with the concurrence of the Director of Cost and Program Evaluation, and that the level of resources required to develop and procure the program is consistent with the priority level assigned by the Joint Requirements Oversight Council (JROC).”

Section 2366a also requires the Program Manager (PM) to notify the MDA if:

The projected cost of the certified program, at any time before Milestone B, exceeds the cost estimate submitted at the time of certification by at least 25% or
The time period required for delivery of an IOC exceeds the schedule objective established in accordance with section 181(b)(5) of title 10, United States Code by more than 25%.

The MDA, in consultation with the JROC, must then determine whether the level of resources required to develop and procure the program remains consistent with the priority assigned by the JROC. The MDA may withdraw the MS A certification or rescind the MS A approval if the MDA determines that such action is in the interest of national defense.

Not later than 30 days after the PM submits a notification to the MDA, the MDA must submit a report to the congressional defense committees that:

Identifies the root cause(s) of the cost or schedule growth;
Identifies appropriate acquisition performance measures for the remainder of the development of the program; and
Includes one of the following:
- A written certification (with a supporting explanation) stating that—
  - the program is essential to national security;
  - there are no alternatives to the program that will provide acceptable military capability at less cost;
  - new estimates of the development cost or schedule, as appropriate, are reasonable; and
  - the management structure for the program is adequate to manage and control program development cost and schedule.
- A plan for terminating the development of the program or withdrawal of Milestone A approval, if the Milestone Decision Authority determines that such action is in the interest of national defense.

10.10.1.7. Reporting Status of Milestone A Cost Estimates and Initial Operational Capability (IOC) Objectives

For programs that are expected to be Major Defense Acquisition Programs, the Office of the Under Secretary of Defense for Acquisition Technology and Logistics (OUSD(AT&L) will ensure that the program cost estimate and the IOC objective are documented in the Milestone A Acquisition Decision Memorandum (ADM).

Program Managers are required to submit current program status with respect to the original cost estimate and IOC objective as captured in the MS A ADM on a quarterly basis via the Defense Acquisition Executive Summary tool in the Defense Acquisition Information Management Retrieval System. Reporting will begin in the first quarter following the Milestone A decision approval and will continue until Milestone B approval is granted for the program.

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