Tracey Goldstein and Steve Loftus
Second of two installments
To bring Army agencies together and gain consensus on a single Army position for cost, the Army developed the Cost Review Board (CRB). The end state of the CRB process is a life-cycle cost estimate called an Army Cost Position (ACP). The ACP is used to create a cost basis for Army program baselines, acquisition decisions, programming, and budgeting. The ACP is also the basis for the Army’s submission of the Acquisition Program Baseline submitted to the Office of the Secretary of Defense and Congress.
The CRB process brings together senior Army leadership from the acquisition, requirements development, financial management, programming, installation, manpower, and logistics communities, with the purpose of developing ACPs that are acceptable to all Army stakeholders. Figure 1 identifies the organizations represented on the CRB.
The five major steps to the CRB process are to define and describe requirements, estimate the costs, reconcile the estimates, conduct affordability analysis, and gain ACP approval. Figure 2 shows the process of developing and approving a Cost Analysis Requirements Description (CARD).
STEP 1—Define and Describe Requirements
Requirements are identified using the CARD. The CARD document is prepared and submitted at each milestone decision. Acquisition Category (ACAT) I and II Special Interest Program officials submit CARDs to the Assistant Secretary of the Army for Acquisition, Logistics, and Technology (ASAALT) for final approval. For all other ACAT II and ACAT III programs, CARDs are also prepared, but they receive final approval from the program executive officer (PEO). DoD 5000.4M, Cost Analysis Guidelines and Procedures, dated Dec. 12, 1992, provides specifics on preparation of CARD documents.
The CARD, which is written by the acquisition program office, provides both narrative and tabular data, covering the areas listed in Figure 3. This document serves as the genesis for costing the program.
The component program management office (PMO) prepares the CARD, and the component PEO approves it. After the PEO approves the CARD for submission to HQDA, AR 70-1, Army Acquisition Policy, dated July 22, 2011, states that the Army Acquisition Executive shall review and approve the Army CARD. The approval part of the Army Systems Acquisition Review Council process. Consequently, the CRB process requires the PMO to submit a PEO-approved CARD to the ASAALT, who in return staffs the CARD through HQDA offices represented on the CRB.
The staffing process ensures that the Army as a whole is in agreement with the program requirements described in the CARD. The CARD is staffed to representatives of the CRB members for comments. The staffing includes adjudication of comments and a CARD presentation to the CRB Working Group (CRBWG), an O-6/GS-15-level forum leading to the CRB. The approval process culminates with a formal CARD presentation to the CRB members. Once approved, the CARD becomes the basis for all cost estimates developed in support of the milestone decision.
STEP 2—Estimate Costs
The estimates developed for the acquisition decision review are the Program Office Estimate (POE), developed by the program office, and the Independent Cost Estimate (ICE), developed by the Acquisition Costing Directorate of the Deputy Assistant Secretary of the Army for Cost and Economics (DASA-CE). If the Office of the Secretary of Defense (OSD) is responsible for the acquisition decision, then the OSD Cost Assessment and Program Evaluation Directorate also develops an ICE using the CARD.
STEP 3—Reconcile Estimates
The CRB Office convenes the CRBWG, which is composed of action officers from the organizations represented on the CRB, to develop the recommended ACP through the reconciliation of the ICE and the POE. The reconciliation, which takes about two weeks, is designed to provide a recommended ACP that accurately reflects the program’s life-cycle costs. These include all costs associated with the program from inception until demilitarization or retirement. The process ensures that the estimate is based on sound and defendable cost estimating methodologies and that the program adheres to HQDA policies. Issues and inconsistencies are identified and resolved.
STEP 4—Conduct Affordability Analysis
Once the reconciliation is completed, the Army G-8‘s Program Analysis and Evaluation Directorate conducts an affordability analysis to determine whether the program is fully funded through the Futures Years Development Plan (FYDP). If there are funding shortfalls, the Army identifies alternate funding sources or modifies the program to work within its existing funding. If there is excess funding, the program is accelerated or the funds are used for other priorities. At this stage, funds included in the life-cycle costs but funded in other areas or programs are subtracted to preclude double-counting of required resources.
STEP 5—Reconvene CRB
The CRB reconvenes to review the recommended ACP, resolve any outstanding issues, and come to a consensus. It is important to note that the resulting ACP is not the program office’s position, nor DASA-CE’s. The ACP has the Army’s endorsement and is truly the Army Cost Position. Based upon the CRB’s recommendation, the Assistant Secretary of the Army for Financial Management and Comptroller (ASA (FM&C)) approves the ACP, signifying that the program under review has a reasonable cost estimate and is affordable through the FYDP. The ASA FM&C provides the ACP documentation to the Army Acquisition Executive to support the 2366 Certification requirement.
- TRACEY GOLDSTEIN is a Management Analyst for the DASA PPR. She holds an M.B.A. and an M.P.A. from Syracuse University. She is Level III certified in business – cost estimating and is Level I certified in program management. Goldstein is a U.S. Army Acquisition Corps (AAC) member.
- STEVE LOFTUS, an Army Field Artillery Officer for 10 years, is the Cost Review Board Director for the DASA-CE. Loftus holds a B.S. in math and computer science from The Citadel. He is Level III certified in business – cost estimating and Level I certified in program management. Loftus is an AAC member.