The Defense Acquisition System divides its development program into Acquisition Categories (ACAT). These categories detail the level and amount of oversight, decision authority, and applicable procedures that are required for a program to operate.  An Acquisition category is assigned to a program primarily by the expected program cost and/or level of interest.

Definition: Acquisition Categories (ACAT)  is a defense acquisition program designation and are created to enable decentralized decision-making and execution while ensuring compliance with statutory requirements. Categories dictate the level of oversight, decision-making power, and relevant processes.

There are three (3) Acquisition Categories (ACAT): ACAT I, ACAT II, and ACAT III.  ACAT I programs have the highest level of oversight, with ACAT II and ACAT III programs having decreasing levels of oversight. ACAT I programs have three sub-categories (ACAT IB, IC, & ID). The difference between each category is dependent on the location of a program in the Acquisition Process, funding amount for Research, Development, Test and Evaluation (RDT&E), total procurement cost, Milestone Decision Authority (MDA) special interest, and decision authority.

Instruction: DoD Instruction 5000.85 “Major Capability Acquisition” – Appendix 3A

Description and Decision Authority for ACAT I – III Programs 

Acquisition Category	Reason for ACAT Designation	Decision Authority
ACAT I	Major Defense Acquisition Program (MDAP) (10 U.S.C. of Title 10) Dollar value for all increments of the program: estimated by the DAE to require an eventual total expenditure for research, development, and test and evaluation (RDT&E) of more than $525 million in Fiscal Year (FY) 2020 constant dollars or, for procurement, of more than $3.065 billion in FY 2020 constant dollars MDA designation MDA designation as special interest3	ACAT ID: DAE or as delegated ACAT IC: Head of the DoD Component or, if delegated, the CAE ACAT IB: SAE 2
ACAT II	Does not meet criteria for ACAT I Major system (10 U.S.C. 2302d of Title 10) Dollar value: estimated by the DoD Component Head to require an eventual total expenditure for RDT&E of more than $200 million in FY 2020 constant dollars, or for procurement of more than $920 million in FY 2020 constant dollars MDA designation (10 U.S.C. 2302 of Title 10)	CAE or the individual designated by the CAE 4
ACAT III	Does not meet dollar value threshold for ACAT II or above Is not designated a “major system” by the MDA	Designated by the CAE 4
Unless designated a Major Defense Acquisition Program (MDAP) by the Secretary of Defense (SecDef), AIS programs5, Defense Business System programs, and programs or projects carried out using rapid prototyping or fielding procedures pursuant to Section 804 of Public Law (PL) 114-92, do not meet the definition of an MDAP. ACAT IB decision authority is assigned pursuant to Section 2430 of Title 10, U.S.C. Paragraph 3A.2.b. provides DoD implementation details. The Special Interest designation is typically based on one or more of the following factors: technological complexity; congressional interest; a large commitment of resources; or the program is critical to the achievement of a capability or set of capabilities, part of a system of systems, or a joint program. Programs that already meet the MDAP thresholds cannot be designated as Special Interest. As delegated by the SecDef or Secretary of the Military Department. An AIS is a system of computer hardware, computer software, data or telecommunications that performs functions such as collecting, processing, storing, transmitting, and displaying information. Excluded are computer resources, both hardware and software, that are: embedded as an integral part of a weapon or weapon system; used for highly sensitive classified programs (as determined by the SecDef) or other highly sensitive information technology programs (as determined by the DoD Chief Information Officer; or determined by the DAE or designee to be better overseen as a non-AIS program (e.g., a program with a low ratio of research, development, testing, and evaluation funding to total program acquisition costs or that requires significant hardware development). An AIS that breaches the dollar thresholds in Section 2302d of Title 10, U.S.C., as adjusted, is a “major system.”

ACAT IB Programs [1]

• Pursuant to subsection (d) of Section 2430, of Title 10, U.S.C., the SAE of the Military Department that is managing an MDAP reaching Milestone A after October 1, 2016 will be the MDA for the Major Defense Acquisition Program (MDAP) unless, based on one or more exceptions in the statute, the SecDef designates an alternate MDA.  In accordance with the December 18, 2017 Deputy Chief Management Officer memorandum, the SecDef has delegated the authority to designate an alternate MDA for an MDAP to the USD(A&S).
• At least annually, at the submission of the Program Objective Memorandum, each SAE will provide, in writing, sufficient information to the USD(A&S) to inform whether the basis for an exception exists.  This information must be provided for all programs for which the Military Department anticipates an MDD or a Milestone A decision (or later milestone decision if this will be the program’s first milestone) in the first year of the Program Objective Memorandum FYDP and that are estimated to require eventual total expenditures of funds for all increments that exceed the MDAP dollar value thresholds set in Section 2430 of Title 10, U.S.C., as adjusted and specified in Table 1.
• Programs, for which the SAE is the MDA by operation of Section 2430 of Title 10, U.S.C., will be designated within the DoD as ACAT IB programs to differentiate these programs from ACAT ID programs, where the USD(A&S) is the MDA, or ACAT IC programs, where the USD(A&S) as the DAE has delegated the DAE’s MDA to the SAE.  Should the USD(A&S) designate the DAE or other official as the alternate MDA, based on one or more exceptions in the statute, the ACAT IB program will be redesignated as ACAT ID.
• Pursuant to subparagraph (d)(3)(A) of Section 2430, of Title 10, U.S.C., for programs for which the USD(A&S) has designated an alternate MDA, the Secretary of the Military Department concerned, or designee may request reversion of responsibility back to the SAE.  The USD(A&S) must make a decision with regard to the Military Department’s request within 180 days after receiving the request.  In the event, the MDA for the program reverts back to the SAE, either at the request of the Military Department or at the DAE’s discretion, the program would revert from its ACAT ID designation to an ACAT IB designation.
• SAEs managing ACAT IB programs must continue to comply with all statutes that require information about an MDAP to be provided to OSD or the Office of the USD(A&S).  For example, Section 2430 of Title 10, U.S.C., requires the SecDef to submit Selected Acquisition Reports (SARs) for MDAPs.  For ACAT IB programs, the Military Departments must continue to use the Defense Acquisition Visibility Environment system for preparation and management of APBs and SARs, to enable continued efficient and streamlined execution of Congressional reporting for all MDAPs, including ACAT IB programs, through the Principal Deputy Assistant Secretary of Defense (Acquisition Enablers).
• The Military Departments will use the Defense Acquisition Management Information Retrieval system for the ACAT IB program quarterly unit cost reporting required by Section 2433 of Title 10, U.S.C., and will continue to report other quarterly DAE Summary information.
• All programs that have been initiated by having entered the acquisition management system at either Milestone A or a later milestone before October 1, 2016, and that are designated as either an ACAT ID or ACAT IC program, will continue to follow the acquisition information and reporting requirements described in this issuance.

ACAT IV Army and Navy

While not defined within DoDI 5000.85, both the Navy/Marine Corps and the Army further categorize programs using ACAT IV.

• Navy/Marine Corps: ACAT programs in the Navy and Marine Corps not otherwise designated as ACAT I-III are designated ACAT IV. There are two categories of ACAT IV programs: IVT (Test) and IVM (Monitor). ACAT IVT programs require Operational Test and Evaluation (OT&E) while ACAT IVM programs do not. The DA for these programs is designated by the cognizant Program Executive Officer (Army), Direct Reporting Program Manager (DPRM), or Systems Command (SYSCOM) commander. [SECNAVINST 5000.02F, “Defense Acquisition System and Joint Capabilities Integration and Development System Implementation,” 26 Mar 2019]
• Army: ACAT IV programs are those programs that do not meet the criteria for ACAT III and are estimated to require an eventual total expenditure for RDT&E of less than $100 million (FY 2014 constant dollars) or procurement of less than $400 million. Note: these funding thresholds are guidelines, not mandatory.  The Milestone Decision Authority (MDA) for ACAT IV programs may be delegated by the Army Acquisition Executive to a PEO, who may further delegate the MDA to a project manager at Colonel or the civilian equivalent rank. [ASA ALT ASCI Memorandum, “Implementing Acquisition Streamlining and Cultural Change,” 15 Dec 2017]

AcqNotes Tutorial

AcqLinks and References:

• [1] DoD Instruction 5000.85 “Major Capability Acquisition” – 6 Aug 2020
• Memo: ACAT Guidance on Section 2430d of Title 10
• ASAALT Memo – Implementing Acquisition Streamlining and Cultural Change – 15 Dec 2017

Updated: 2/29/2024

Rank: G2