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    Is the definition of "development cost" as referred to above - and as taught in BCF 103, still: Development cost are funded by RDT&E appropriations ? The DoD Financial Mgmt Reg, 7000.14-R, Volume 2A, Chapter 1, para 010212 - also states that RDT&E funds will be used for developmental activities involved in bringing a program to its objective system. DoD 5000.4-M, para C.3.3 also states that Development Cost is funded from the RDT&E appropriation. Despite the above references - I have been told that Development Cost includes OPA. I contend that OPA is the Procurement Cost, as well as a component of the Program Acqusition Cost, and a component of the Life-Cycle Cost. Your insight for clarity is appreciated. Mike


    Answer

    Development Cost is the cost of all research and development-related activities, contract and in-house, necessary to design and test the system. It includes a number of WBS elements, including Prime Mission Equipment, System Engineering, System Test and Evaluation, Support Equipment, Training, etc. Prototypes and test articles are included in this cost category. Development costs are funded with only the RDT&E appropriation (DoD 5000.4-M C3.3.1 defines Development Cost and how it is funded).

    Title 10 Section 2432 defines the Program Acquisition Unit Cost (PAUC) as the total cost for development and procurement of, and system-specific military construction for, the acquisition program, divided by the number of fully-configured end items to be produced for the acquisition program  It also defines the term full life-cycle cost, with respect to a major defense acquisition program, as all costs of development, procurement, military construction, and operations and support, without regard to funding source or management control.


    PAUC consists of all costs associated with developing, procuring and housing a weapon system. Because it consolidates development, procurement and military construction costs, RDT&E, Procurement and MILCON appropriations are included.  Life-Cycle Cost (LCC) includes all WBS elements and all appropriations.   Although PAUC and LCC are multi-appropriation costs and the calculations include both RDT&E and procurement appropriations, procurement is not included as part of the Development Cost.  So in your case the Development Cost does not include OPA.
     

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