A cost estimate for a proposed materiel solution(s) is submitted at Milestone A . Also, the Director of Cost Assessment and Program Evaluation (DCAPE) conducts an Independent Cost Estimate (ICE) in advance of Milestone A certification. In order to facilitate these estimates, the cost estimating procedures at Milestone A will track those at the other milestone decisions points. This includes the required preparation of a Cost Analysis Requirements Description (CARD). 
The actual process and timing leading to the DoD Component estimate may vary among programs, and therefore a tailored approach should be developed and proposed. Early in the Materiel Solution Analysis (MSA) Phase, the Program Manager (PM) and DoD Component staff should work with the OSD Office of Cost Assessment and Acquisition Resources & Analysis (AT&L/ARA) staffs to develop a plan and schedule for delivery of the cost estimate to support the upcoming Milestone A review. The plan might be subjected to approval by the Milestone Decision Authority (MDA).
The DoD Component Cost Estimate, in addition to the Director CAPE independent cost estimate, is used to support the MDA certification requirements for Milestone A. The emphasis for the Milestone A cost estimate is to provide costing adequate to support the selection of the preferred materiel solution(s) identified by the Analysis of Alternatives, and to support a determination by the MDA that current funding for the Technology Development (TD) Phase (required technology development, competitive prototyping, and possibly preliminary design of the end-item system) is adequate. The Milestone A cost estimate is a complete estimate of the system life-cycle cost. However, for the costs associated with the acquisition phases beyond TD Phase (i.e., Engineering, Manufacturing & Development, Production and Deployment, and Operations and Support), the Milestone A cost estimate typically would not have the same level of rigor or fidelity as will later cost estimates (prepared for Milestones B and beyond). Although the cost estimate addresses the complete Life-Cycle Cost (LCC), since it must support the Analysis of Alternatives (AoA) process, only the program development and procurement costs are subject to certification. 
The DoD Component Cost Estimate submitted at Milestone A should be based on a sound description of the program and follow the general requirements of a CARD. Understandably, programs at Milestone A are less well-defined than programs at later milestone decision points. The Initial Capabilities Document (ICD), Technology Development Strategy (TDS), Systems Engineering Plan (SEP), Test and Evaluation Strategy (TES), and Analysis of Alternatives (AoA), together with the CARD, should be used to provide a technical and programmatic description that should be the foundation for the cost estimate. 
To assist in the certification process, the MDA may request that the Cost Assessment staff conduct an independent cost assessment (which is normally a sufficiency review of the DoD Component Cost Estimate). In such cases, the review process and timeline will be established in consultation with the DoD Component on a case-by-case basis. However, the DoD Component normally should plan on providing documentation of its cost estimate to the Cost Assessment staff for review at least 45 days in advance of the Overarching Integrated Product Team (OIPT) meeting. This cost estimate must receive DCAPE approval before Milestone A certification may be granted. 
Note: if the certified cost estimate grows at least 25% percent during the Technology Development Phase, then the PM must notify the MDA of the increase. The MDA in turn consults with the Joint Requirements Oversight Council (JROC) to reassess program requirements and the military need(s) for the system. See DoD Instruction 5000.02, Enclosure 2, section 5.c.(3) for further guidance.
AcqLinks and References:
- Defense Acquisition Guidebook (DAG) – Chapter 3
- GAO Cost Estimating and Assessment Guide
- NASA Cost Estimating Handbook – 2008
- DoD 5000.04-M, “DoD Cost Analysis Guidance and Procedures” – Dec 1992
- DoD Directive 5000.04 “DoD Cost Analysis Improvement Group (CAIG)” – 16 Aug 06
- 10 USC Sec. 2434 “Independent cost estimates; operational manpower requirements”
- Website: CAIG Operating and Support Cost-Estimating Guide
- Website: OSD Director of Cost Assessment and Program Evaluation (DCAPE)