On March 13 2020, the new DoD Instruction 5000.73 was released as part of the 5000.02 rewrite for Adaptive Acquisition Framework. It provides new guidance for Middle Tier of Acquisition and Software
For the most part, the major capability programs have the same policy and timelines. All MDAPs and subprograms require an Independent Cost Estimate for milestone acquisition reviews. The program office must notify CAPE at least 210 days in advance and submit a Cost Analysis Requirements Document (CARD) 180 days in advance.
Middle Tier of Acquisition (MTA) rapid prototyping/fielding
Authorities: OSD CAPE owns the lifecycle cost estimates for MTA rapid prototyping programs designated ACAT I — the largest programs — and for rapid fielding it is ACAT I and II. CAPE may delegate the cost estimate to the Service Cost Agencies. Lower-level programs still require a service cost estimate, but does not involve CAPE at the OSD level.
Timelines: The MTA cost estimate is accelerated. Instead of a formal CARD, the service submits “comprehensive program description” no later than 10 days after the Acquisition Decision Memorandum (ADM) initiating the program. An independent cost estimate at the service level must be finished 60 days after the ADM for review. The cost estimate is then delivered to several parties, including the MTA governance board chaired by USD(A&S).
One potential bottleneck in the process is that 14 days after ADM, the chief of the Service Cost Agency and the Deputy Director for Cost Assessment at CAPE must get together. The outcome is a decision whether CAPE or the service performs the cost estimate, but may involve more than that. For example, there may be arguments as to what constitutes submission of a “comprehensive program description.”
Software Acquisition
Authorities: Similar to MTA, CAPE is responsible for cost estimates for software programs likely to exceed ACAT I or II. CAPE may delegate the estimate to the service. At any time during execution, CAPE may update the cost estimate. ACAT III and IV programs will follow service-directed procedures.
Timelines: Software pathway cost estimates are planned to take the same 210 days from notification as Major Capabilities. CAPE is supposed to tailor the timeline, but a kick-off meeting is to be held “no later than 180 days before the planned [execution phase].” A CAPE representative must co-chair the meeting.
Unlike MTAs, a formal CARD submission is required for software pathway programs. Moreover, “CA analyst and representatives from the SCA and PMO will conduct site visits and collect and review program data.”
Cost and Software Data Reports
ACAT I and II programs: Program offices must have their contractors report cost data on all contracts over $50 million, and with discretion between $20-$50 million. That goes for prime as well as major subcontractors.
MTA Programs: The threshold for reporting cost data is actually lower for MTA programs. So long as the program is likely to exceed $100 million, all contracts over $20 million must report contract cost data.
Contract type: Non-FAR contracts like Other Transactions still must submit cost data if they break these thresholds. For example, Future Vertical Life from the Army is using OT contracts and MTA authorities, but it still must submit government unique cost reports.
New Reports: For ACAT I and II programs over $100 million, there are two new reports required of contractors. These apply regardless of non-FAR contracts, so long as the total size (including options) is over $50 million. The two reports are for hardware Maintenance and Repair Parts as well as for Technical Data.
Observations
It appears that the Software Pathway will require basically the same cost estimating procedures as required for Major Capabilities. In other words, there is no relaxation of cost estimates for software programs. For Middle Tier of Acquisition programs, it appears that cost estimates are to proceed on an accelerated timeline and can skip the formal CARD documentation, but still involves OSD CAPE and the service cost agencies to a similar degree.
One of the striking aspects is that MTA programs actually have a lower contract cost data reporting threshold, just $20 million compared to $50 million mandatory for Major Capabilities. The fact that a Middle Tier program, even if it uses non-FAR contracts like OTs, will still have to submit government format cost data, software data, technical data, and potentially others, starts to make it sound a little less like commercial practices. Non-traditionals may have a hard time participating in MTA and software pathway programs of substantial size. They will have to start adopting many management tools of traditional primes, such as for cost accounting.
An open question is that of funding. Ostensibly, the cost estimate is supposed to provide the basis for the service budget process through the POM. So for an MTA program, the accelerated 60 day cost estimate would then enter a perhaps two year long process before funds can be made available. How much opportunity is there for the service to move funds within the year of execution to a new MTA program?
Finally, note that DoDI 5000.73 cost policy provides just one functional layer of process on MTA and software pathways, which were supposed to be rapid and agile. There’s a high likelihood that all functional areas will come out with a similar list of policies. Not only will that put demands on the program office to respond to OSD and service functionals, but that information will filter to OSD’s MTA governance board, making the whole thing look more and more like major capability acquisition.
Thanks for pointing this out, Eric. I do see a couple of possible grounds for optimism. One is that (according to Note “3” on page 34) the CCDR filing doesn’t always have to be the full 1921 series — it can be just the FlexFile and QDR, which is much less intrusive (and less work). The other is that I don’t see anything in 5000.73 that requires a DoD-compliant EVM system on the contractor side. If I’m right about that, it would eliminate one of the big barriers for nontraditionals.
Yes, that is a bright spot. Instead of submitting gov’t format Excel 1921, 1921-1 (often a tab per WBS item), and 1921-2, the contractor can submit in the contractor’s format, so long as it contains the necessary data elements. The CSDR system is supposed to be separate from the EVMS, so you wouldn’t see anything there from EVMS, but in reality most contractors fulfill the CSDR reports using the output of EVMS. Usually, contractors don’t track things like WBS elements, recurring/non-recurring, and so forth, in their financial accounting system. That’s done on the side in the EVMS toolset. Keeps things cleaner bc of all the change occurring in the mgmt acccounting system. But the regular OEMs are used to EVMS so that’s their process. In theory, without an EVMS you could just add some codes to accounting charge numbers and aggregate a CSDR from the actuals by contract. You still need detailed tracking of accounting, but you don’t need the rest of EVMS such as detailed budgeting, scheduling, earning value, variance analysis, etc.