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    1. Can programs split or break down their BA4 or BA5 RDT&E dollars separately to determine an ACAT Level? 2. Do increments have to roll up into an LCCE? Or can they be validated on their own by the MDA?


    Answer

    1. No. ACAT determination is on an appropriation basis, not on a budget activity basis. A program may be designated as a particular ACAT if it meets the expenditure thresholds for either RDT&E or procurement appropriations. ACAT determination is based on the dollar value of all increments of a program. Looking strictly at the Research, Development, Test and Evaluation (RDT&E) appropriation, if the estimated RDT&E expenditure in RDT&E funds is $480 million in FY 2014 dollars, then the program is designated as ACAT I. If the estimated expenditure in RDT&E funds is $185 million in FY 2014 dollars, then the program is designated as ACAT II. Programs not meeting the ACAT I or ACAT II RDT&E thresholds are designated as ACAT III. See DoDI 5000.02, Enclosure 1, Table 1.

    2. A LCCE must consider all increments. Increments are defined and costed separately but must be included in the LCCE for the entire program. Although situations may vary somewhat depending on individual circumstances, the life-cycle cost estimate should attempt to address as much of the program, including known future increments, as can be defined at the time of the initial (Increment 1) milestone review. Any exclusions for portions of the program that cannot be defined at that time should be clearly identified. For major defense acquisition programs (MDAPs), the Director, Cost Analysis and Program Evaluation (DCAPE), conducts Independent Cost Estimates and cost analysis. For lower ACATs, each of the Services has a Service Cost Agency that performs similar functions to advise the Milestone Decision Authority on the adequacy of funding estimates, including the Life Cycle Cost Estimate (LCCE).

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