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    Should LUT quantities that were paid for with RDTE funding be included in my program's APO?


    Assuming the APO means Acquisition Program Objective which means the same as Approved Acquisition Objective, the following is from a previously submitted question on this subject
    Although I am not familiar with the term APO, I do know that the different services and agencies may have a slight variation on the term AAO, but AAO is the term I have always used.  With that said, my own USMC-specific experience has led me to use the following definition for Approved Acquisition Objective (AAO):
    The quantity of an item authorized for peacetime and wartime requirements to equip and sustain U.S. and Allied Forces in accordance with current DoD policies and plans.
    The JCIDS process supports the acquisition process by identifying and assessing capability needs and associated performance criteria to be used as a basis for acquiring the right capabilities, including the right systems (and quantities).  It is during this process that the Acquisition Objective (AO) is developed and established.  The AAO quantities for a particular program are initially codified in the associated Capability Development Document (CDD) or Capability Production Document (CPD) depending on where you enter the Defense Acquisition System.  Once established, the AAO is incorporated into other related acquisition documents to include the Acquisition Strategy, the Acquisition Program Baseline, and the Life Cycle Sustainment Plan.
    The AAO is a living number.  It can and does change over the course of a system's life cycle.  Development of the AAO is very much an iterative process, inextricably linked to the development of the equipment itself and as such, must be regularly reviewed and revalidated to ensure the AAO continues to reflect the concept of employment given the projected force structure and the changes in capability which may be realized as the program develops.
    Accordingly, it is anticipated that all AAOs for equipment, particularly that equipment in the acquisition cycle, will be reviewed and validated every year in support of the development of the Program Objectives Memorandum (POM) and the Defense Planning Guidance (DPG) which your particular service or agency is required to support.  The AAO may change due to changes in the units that use a particular system, changes to their missions, or changes to the final product that is fielded.  At a minimum, I would recommend that the AAO for an individual program be reviewed and updated, if necessary, at each milestone decision.  Any changes to the AAO would have to be validated by the requirements process and incorporated into the respective acquisition documents.
    More information on this topic can be found in several different references such as the JCIDS Manual, DoD Financial Management Regulations, and others at the Defense Acquisition Portal website:
    As my experience is also USMC-specific, my familiarity is with the term AAO. That being said, I would also add that part of your overall Acquisition Strategy (AS), Test & Evaluation Master Plan (TEMP), and Life Cycle Sustainment Plan (LCSP) would (or should) address the quantities of test articles/types (prototypes, production-representative, or production), tests events to be performed (DT/OT), funding for the specific types of test articles and test events, and what the program intends to do with the items after testing is complete (i.e., are the test articles consumed by the testing or will they be repaired/modified to bring them up to a full production model configuration and fielded as part of the overall fielding strategy to place the items into the operational inventory.  As the original author stated, the number associated with the AAO will change over the system's life cycle and changes in one area of the overall program strategy will have a ripple effect on other aspects of the program.  The subject of test assets is discussed in the Financial Management Regulation (FMR) Volume 2A, Chapter 1 010213 "RDT&E Definitions and Criteria" and the paragraph on "Test Articles and Test  Support" (Section 010213 Paragraph C 5). 

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