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    (1) When determining ACAT categories, must one include total life cycle costs (including O&S costs, etc) or only R&D and procurement costs? (2) Similiarly, does a Aquisition Plan account for total life cycle costs or just procurement and inital spares cost? (3) If the product is software; are planned annual licence costs and software version upgrade costs considered part of the procurement or viewed as O&S costs?


    To begin with, the Acquisition plan and acquisition categories (ACATs) have two different purposes.  The Acquisition plan, for example, should be an integral part of your execution strategy and should contain all costs throughout the program's lifecycle.  ACATs, however, establish your MDA, reporting, and oversight levels.  According to DOD 5000.02 Enclosure 3, ACAT categories are established by R&D and procurement expenditures.  For ACAT 1 programs, R&D must be greater than $365M or production must exceed $2.190B (both in FY 2000 constant dollars).  Additionally, OSD (AT&L) can designate a program as an ACAT 1 based on special interest.  The formula is a little different for determining ACAT 1A status for a Major Automated Information Systems (MAIS).  For an AIS program to be considered a MAIS, the following criteria must be met.

    When estimates exceed the following criteria AIS programs will be designated
    as MAIS or ACAT 1A programs, which includes all activities related to the AIS definition, design, and deployment regardless of the appropriation or funding
    1)  Estimated to exceed $32M (FY 2000 constant) for any single year
    2)  Estimated to exceed $126M (FY2000 constant) in total expenditures from the start of the Material Solution Phase through deployment at all sites, or
    3)  Estimated to exceed $378M (FY 2000 constant) for the life of the system.
    Finally, whether or not expenditures for annual licenses or software upgrades can be considered to be production or O&S costs are determined by the anticipated phase in the program. For example, licenses purchased for startup may be considered a part of production; however, annual upgrades after deployment would normally be considered O&S.

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