Number: 

DAO 208-16

SECTION 1. PURPOSE.

This Order establishes the policy, procedures, and responsibilities for: implementing the Acquisition Program and Project Management Framework ("the Framework") on all acquisition programs and projects and cost estimating and implementing independent cost estimates (ICE) throughout the Department of Commerce ("the Department").

SECTION 2. APPLICABILITY.

The provisions of this Order shall apply to all Department-wide programs and projects with particular emphasis on those that are high-profile as defined in Section 3. The Framework's, Value Engineering (VE), and cost estimating concepts, as implemented by each Department Operating Unit (OU), apply to all programs and projects that may lead to procurement, regardless of size. Additional procedures, processes, and document templates can be found in the Department Scalable Acquisition Project Management Guidebook ("the Guidebook"). However, the Guidebook defines the minimum documents required at each milestone for high-profile programs and projects regardless of delegation status. These provisions do not apply to a level-of-effort activity defined in Section 3.

SECTION 3. DEFINITIONS.

.01 Acquisition Framework means the structured sequence of acquisition project management phases and the major decision milestones required to manage the progression of those phases (see Figure 1). The Framework:

a. describes the minimum standard processes, documents, and reviews to which all high-profile acquisition programs and projects (defined in Section 3 below) must adhere;

b. places emphasis on early program and project planning: requirements development and traceability, risk identification, and resource and cost expectations;

c. is scalable (Section 3.15) depending on the program's or project's size, complexity, and risk; and

d. describes the principles of a life-cycle approach to managing acquisition programs/projects.

Figure 1. DOC Acquisition Framework

.02 An Analysis of Alternatives (AoA) assesses potential material solutions to satisfy the capability need documented in the approved Mission Need Statement and Sponsor Commitment at Milestone 1. It should include consideration of Value Engineering principles to focus on identification and evaluation of alternative solutions, measures of effectiveness (MOE), cost, schedule, concepts of operations, and overall risk, including the sensitivity of each alternative to possible changes in key assumptions or variables. It also addresses trade space (scope of analysis) to minimize risk. The AoA assesses critical technology elements associated with each proposed solution, including technology maturity, integration risk, manufacturing feasibility, and, where necessary, technology maturation and demonstration needs. The AoA is normally conducted during the Project Definition Phase, is a key input to and underpins the proposed cost and schedule baselines, and supports the project approval decision at Milestone 2.

.03 Baseline means the cost, schedule, and performance parameters that shall define every high-profile program or project beginning at Milestone 2. These will be defined in the Program or Project Baseline document (see the Guidebook for the suggested template) and refined, as necessary with justifications, at subsequent milestones:

a. Cost Baseline has two components:

1. Lifecycle Cost means the total of the direct, indirect, recurring, and nonrecurring costs, including the construction of facilities and civil servant costs and other related expenses incurred or estimated to be incurred in the design, development, verification, production, operation, maintenance, support, and retirement of a program or project over its planned lifespan, without regard to funding source or management control.

2. Development Cost (a component of lifecycle cost) means the total of all costs, including construction of facilities and civil servant costs, from the period beginning with the approval to proceed into the Project Development phase (Milestone 2) through the achievement of operational readiness (Milestone 4) without regard to funding source or management control, for the life of the program or project.

b. Schedule Baseline means the program time planned from Milestone 2 to achievement of operational readiness at Milestone 4.

c. Performance Baseline means the group of key performance parameters or metrics established at Milestone 2 that define the program's or project's operational capabilities.

.04 The Cost Analysis Requirements Description (CARD) is a description of the salient features of the acquisition program and of the system itself. It is the common description of the technical and programmatic features of the program that is used by the teams preparing the Program Office Estimate (POE) ICEs, including Life Cycle Cost Estimates (LCCEs).

.05 High-Profile Acquisition Program or Project means a program or project designated for oversight by the Milestone Review Board (MRB) or an OU through delegation which meets one or more of the following criteria:

a. Warrants special management attention or is deemed high risk due to its:

1. Criticality: Key to mission goals and objectives and to achieving the objectives in the Department Balanced Scorecard;

2. Complexity: Multiple organizations' involvement and interfaces, complex and/or rare skills requirements, analogous characteristics to other challenged programs;

3. Technology: Challenges identified requiring probable research, development, and/or demonstration; and/or

4. Visibility: Subject to external review and extraordinary media or political attention; potential to damage the reputation of the Department if unsuccessful.

b. Entails expenditure of significant levels of resources:

1. For any program/project: Development costs, valued in current year dollars, of more than

$75 million or lifecycle costs, valued in current year dollars, of more than $250 million.

2. For information technology (IT) programs/projects: Lifecycle costs, valued in current year dollars, of more than $75 million or annual cost (all funding from all sources allocated to the project or program in a given fiscal year) exceeding $30 million.

3. For real property and facilities: Lifecycle costs, valued in current year dollars, of more than $40 million.

c. Is nominated as a high-profile program or project by an MRB member (see Figure 2), and such nomination is approved by the Deputy Secretary.

.06 An ICE is prepared by an organization independent of the acquisition's program/project chain of command, and is based on detailed technical and procurement information used to make the baseline estimate-usually the program or project LCCE. The ICEs are developed to support the Department's milestone decisions for high-profile programs and projects. The ICEs are used primarily to validate program or project LCCEs and are typically reconciled with them. Because the team performing the ICE is independent (preferably federal employees outside the program), it provides an unbiased test of whether the POE is reasonable. It is also used to identify risks related to budget shortfalls or excesses. A reliable ICE is:

a. comprehensive when it accounts for all possible costs associated with a program, is structured in sufficient detail to ensure that costs are neither omitted nor double counted, and documents all cost-influencing assumptions;

b. well-documented when supporting documentation explains the process, sources, and methods used to create the estimate, contains the underlying data used to develop the estimate, and is adequately reviewed and approved by management;

c. accurate when it is not overly conservative or optimistic, is based on an assessment of the costs most likely to be incurred, and is regularly updated so that it always reflects the current status of the program; and

d. credible when any limitations of the analysis because of uncertainty or sensitivity surrounding data or assumptions are discussed, the estimate's results are cross-checked, and an independent cost estimate is conducted by a group outside the acquiring organization to determine whether other estimating methods produce similar results.

.07 An Independent Government Cost Estimate (IGCE) is conducted to check the reasonableness of a contractor's cost proposal and to make sure that the offered prices are within the budget range for a particular program. The program manager submits it as part of a request for contract funding. It documents the government's assessment of the program's most probable cost and ensures that sufficient funds are available to execute it. The benefits of an IGCE are outlined in Subpart 15.404-1 of the Federal Acquisition Regulation, Proposal Analyses Techniques.

.08 Level-of-Effort Activity means a funded activity that does not meet the definition of a program or project. It may have some of the characteristics of a project or program, but not all. These activities are usually the on-going efforts of an organization.

.09 A Milestone Decision Authority (MDA) for high-profile programs/projects is the Deputy Secretary or an individual who has been formally delegated authority to make acquisition investment decisions at program/project milestones for the Department. This authority may be delegated, in writing with rationale. Non-high-profile programs and projects also have MDAs as determined by the Operating Unit.

.10 The Milestone Review Board (MRB) is the authorizing body for approval of an identified Departmental high-profile acquisition program or project to proceed from one phase of the Framework to the next (see Figure 2). The authorities of the MRB are derived from those vested in or delegated to its members. It provides a collective vehicle for members to review a program or project and execute their individual authorities regarding approval to proceed to the next milestone or directing corrective action to proceed into the next phase. Specifically, the authorities vested in the MRB include approval of procurements planned for the next acquisition phase (both information technology (IT) (IT Investment Authority) and non-IT).

.11 The MRB Chair for high-profile programs/projects is the Department's Deputy Secretary who will be advised by the MRB's members on a program's or project's readiness and risk to proceed to the next phase and recommend specific exit criteria for the phase. The Deputy Secretary may designate an individual to chair an MRB, but the MDA shall remain with the Deputy Secretary unless formally delegated in writing with rationale.

.12 A Program is a consolidated effort to achieve a defined goal and includes a collection of ongoing activities, as well as finite projects, with objectives that achieve a specific purpose or outcome of a Departmental strategic goal or as required by statute or regulation.

.13 Program Office Estimate (POE) is the program or project office's LCCE based on the CARD and accounts for all estimated program/project costs, both government and procurement IGCEs.

.14 Project means a collection of discrete activities, acting as a system, with specific output that achieve a clearly defined objective and support an overall program goal. Projects have a finite duration with a clearly defined start and end.

.15 Quarterly Reviews: Awareness and assessment updates on high-profile programs (defined in Section 3.05) to inform leadership on programmatic issues requiring corrective decisions and tied to events in budget formulation and execution. These reviews will be held at the direction of and chaired by the Deputy Secretary.

.16 Scalable refers to the flexibility of the Framework processes and documentation to be tailored to suit a program or project's size, complexity, and risk. Programs and projects that are not identified as high-profile must nevertheless adhere to the Framework's concepts as interpreted by each OU to tailor the documentation and reporting according to project size and risk. Examples of how application of the Framework may be scaled can be found in the Guidebook.

.17 A Work Breakdown Structure (WBS) deconstructs a program's end product (viz., product-oriented) into successive levels with smaller specific elements until the work is subdivided to a level suitable for management control. This ensures the use of high-quality estimating structures that allow programs to plan and track costs and schedules by defined deliverables, and results in more consistent cost estimates. Standardizing the work breakdown structure enables an organization to collect and share data among programs, a U. S. Government Accountability Office (GAO) best practice. It also enables the Department to compare costs across programs, as not standardizing the work breakdown structure causes extreme difficulty in comparing costs from one contractor or program to another.

SECTION 4. POLICY.

.01 The Department, through the MRB, shall provide for coordinated oversight, review, and approval of planning, acquisition, and management of high-profile acquisition programs and projects, as defined above in Section 3, including professional services contracts that provide support for them. Heads of OUs shall provide analogous oversight, review, and approval of non-high-profile and delegated high-profile acquisition programs and projects through application of the Framework process (see Figure 1). Oversight entities, whether the MRB or Head of an OU, shall place particular emphasis on initial activities of the Framework acquisition process. These review and approval activities will be required for critical management decisions affecting any acquisition program or project (high-profile or not) including any management action that will move it to a new phase of development as defined in the Framework. Critical management decisions could include, but are not limited to:

• Establishment of mission need;
• Completion of an acquisition strategy;
• Completion of an alternatives analysis;
• Establishment of cost, schedule, and performance baselines;
• Directed remedial action following a baseline deviation, and
• Award of contracts.

.02 High-profile programs and projects, including their component or subordinate projects, that have been designated for MRB oversight and decision making, shall not be subject to subordinate review by the Commerce IT Review Board (CITRB), the Contract Review Board, or the Facilities Review Board for purposes of approving a program/project milestone, approving procurements that are planned for the next acquisition phase, or approving progression to the next acquisition phase. Quarterly reviews (defined in Section 3) are separate from the milestone review process. Although high-profile programs and projects will not be subject to CITRB or other review boards for the purposes indicated above, the CITRB and other review boards may, at the discretion of their chairs, be convened to support other needs for oversight and risk management of their cognizant projects.

.03 All Department-designated high-profile programs and projects, regardless of size or MDA, shall have cost (lifecycle and development), schedule, and performance baselines as (defined in Section 3) established at Milestone 2 that shall be tracked by the Program or Project Manager (PM); deviation of any baseline by 20 percent or more shall be identified to the MDA (the MRB Chair or OU-designated MDA) within 30 calendar days of the date the deviation is identified.

.04 All Department-designated high-profile programs or projects, including those for which milestone decision authority is delegated, shall be responsible for preparation of an ICE and a POE in support of Milestone 2 and shall submit a revised ICE following a baseline deviation. At Milestone 1, these programs/projects shall prepare the range of costs (viz., a rough order of magnitude (ROM)) that corresponds to the alternatives proposed in the AoA Plan.

.05 The OUs shall apply the disciplined Departmental Acquisition Framework which incorporates VE principles that help ensure realistic budgets, identify and remove nonessential capital and operating costs, and improve and maintain acceptable quality in program and acquisition functions.

SECTION 5. RESPONSIBILITY.

.01 The MRB Chair, the Department Deputy Secretary (see Figure 2), with advice from the Board's members shall have milestone decision authority for high-profile programs and projects. The MRB Chair shall issue a Milestone Decision Memorandum at the conclusion of each milestone review (nominally within 15 calendar days) defining the program's or project's way ahead in the next phase including necessary procurement authorities, specific phase exit criteria, and other directed actions. The Chair may also direct that specific reviews and studies be undertaken to support a milestone review and may invite additional MRB participants as deemed appropriate to the program or project under review. The Deputy Secretary may delegate in writing, with rationale, MDA and management of any high-profile program or project to the Head of an Operating Unit. This does not exempt that program or project from adherence to the Acquisition Framework (and its minimum documentation) in this policy unless explicitly indicated in the delegation instrument.

.02 The MRB members bring the authorities inherent in their positions to the MRB. They shall apply approved evaluation criteria to inform their recommendations to the Chair and ensure consistency. The MRB members shall identify their staff to work with the MRB Executive Secretariat (Office of Acquisition Management (OAM)) to ensure that the documentation submitted in support of each milestone review is complete and ready for review, particularly when the program/project crosses subject-area-specific portfolios (e.g., Chief Information Officer for IT programs, the Director, Office of Administrative Services for facilities; and the Director, OAM for non-IT and non-facilities). The Chief of Staff of the Department and of the Bureau under review will be notified of a pending MRB.

Figure 2. Membership of the Milestone Review Board (MRB)

.03 The Office of Acquisition Management:

a. shall serve as the MRB Executive Secretariat and the organization responsible for implementation of the Acquisition Framework, management and promulgation of processes and best practices which implement the Framework, centralized training of acquisition program management professionals operating within the Framework, and recommending Framework modifications to respond to lessons learned. The OAM, with inputs from the MRB members and Bureaus, shall maintain and update at least semi-annually the list of high-profile programs and projects identified for MRB oversight to include the schedule for reviews and milestone dates.

b. is the Department senior accountable official for VE (DOO 20-26, OMB Circular A-131, "Value Engineering") and for the incorporated VE principles within the disciplined DOC Acquisition Framework.

c. is the organization responsible for ICE oversight, policy, training, and guidance in the Department. The OAM is also responsible for collection and storage of complete actual cost-related data from past estimates on high-profile programs and projects, a GAO's best practice. At Milestone 1, OAM will validate the ROM estimate submitted by the program/project against the alternatives proposed in the AoA Plan. At Milestones 2 and 3 or as the result of a baseline deviation, OAM will either prepare an ICE or review an ICE prepared by a qualified entity separate from and outside the chain of command of program/project office. The OAM shall establish implementing guidance, as needed (see also Resources).

a. shall follow the tenets of the Framework and prepare the mandated and directed milestone documentation as evidence of having undertaken the process activities specified in each Framework phase (see Figure 1). They shall also submit costs (lifecycle and development), schedule, and performance baseline estimate beginning at Milestone 2 and notify their MDA (MRB Chair or as delegated) and the OAM, for high-profile programs/projects, if any baseline will experience a deviation of 20 percent or more from the last established baseline.

b. of all programs and projects shall apply the principles of Value Engineering in development of AoAs and consider VE, as appropriate, in planned procurements.

c. of all high-profile programs/projects, including those for which milestone decision authority is delegated, are responsible for a POE and for sponsoring preparation of an ICE in support of Milestones 2 and 3. The ICE sponsors (whether the Program Manager or a senior official) shall provide the cost estimating organization (whether OAM or another) with a CARD and shall use independent organizations to prepare ICEs and direct them to follow GAO's cost estimating principles and best practices (Resource (a)). At Milestone 1, PMs shall prepare a ROM estimate, along with its underlying assumptions, that aligns with the proposed AoA Plan alternatives. They shall also provide OAM with historic costs of similar/analogous Departmental programs where available from Government and contractor records.

.05 Heads of Operating Units shall:

a. identify to the MRB Executive Secretariat programs and projects in their purview which meet one or more of the threshold criteria or have the potential to do so. They shall adopt and/or tailor (scale) the Framework, as appropriate, for non-high-profile programs and projects in their purview and develop, tailor, and institute analogous acquisition review boards and processes to implement the Acquisition Framework for these non-high-profile programs and projects. They shall also keep the MRB Secretariat informed of program/project review schedules and decisions from their internal milestone reviews. If delegated as the MDA for a high-profile program or project by the Deputy Secretary, the Head of an Operating Unit shall manage that program or project in accordance with the Acquisition Framework defined in Figure 1 and with the minimum processes and milestone document deliverables defined in the Guidebook. This MDA authority cannot be re-delegated. The Head of the Operating Unit will forward the Milestone Decision Memorandum (and if requested by the Deputy Secretary, the pertinent milestone documents) for each such delegated program or project to the Deputy Secretary within 30 calendar days of the milestone decision.

b. shall review the ICEs prepared in support of Milestones 2 and 3 for high-profile programs/projects delegated to them for milestone decisions. They shall also furnish OAM with copies of the POE, CARD, ICE, and supporting ICE documentation when requested.

SECTION 6. GENERAL REQUIREMENTS AND PROCEDURES.

.01 The MRB meetings shall be called by decision of the Chair. Deputy Secretary-chaired MRBs (unless delegated) shall occur at Milestones 1, 2, and 3. Milestones 0 and 4 and review processes as defined by the Framework are the responsibility of the Heads of Operating Units. The Deputy Director for Program Management, OAM shall serve as the Executive Secretary. The Executive Secretary shall circulate background and meeting read-ahead materials to the members, organize MRB meetings, prepare Milestone Decision Memorandums for the Chair (and MDA) approval, and maintain all MRB records and a current list of MRB oversight programs and projects and their next planned milestone and probable timing of the milestone review. Based on the MRB staff review of milestone documentation and issues identified and coordinated with MRB members, the Chair may elect not to convene a formal MRB meeting.

.02 High-Profile Program/PM shall submit milestone documentation, both specified by the Framework and by the preceding Milestone Decision Memorandum, to the Executive Secretary not less than 45 calendar days before the scheduled milestone review. They shall send the mandated read-ahead charts not less than 5 business days before the review. They shall also notify the MRB Chair and MRB Secretariat of any cost, schedule, or performance baseline deviation of 20 percent or more from the last established baseline within 30 calendar days of identification.

.03 Baseline Deviation: For high-profile programs or projects subject to MRB oversight or delegated, the operating unit shall report cost, schedule, or performance baseline deviation of 20 percent or more from the last established baseline to the MRB Secretariat. The OAM will analyze the deviation report and recommend corrective actions to the appropriate official(s). For programs or projects not subject to MRB oversight, program or project managers shall report deviation of 20 percent or more from the last established baseline to the authorities designated in the procedures established to implement the Framework within the Operating Unit.

.04 The ICE Preparation and Submission: Any high-profile PM or senior Department official ("the ICE sponsor") may request/direct, respectively, that OAM prepare the ICE or choose an independent organization to do so. Regardless of the choice, the ICE sponsor must meet with OAM at least 180 calendar days before the scheduled MRB (and before entering into an ICE agreement with an outside provider) to coordinate and document any issues that the ICE must address.

a. When prepared by an independent organization: The POE and ICE with accompanying CARD and ICE documentation shall be submitted to OAM at least 60 calendar days in advance of the MRB date. This submission must be accompanied by a presentation by the ICE preparer that addresses the ICE's development, assumptions, work breakdown structure, basis of estimates, and compliance with best practices (see Resources).

b. When prepared by OAM: At the MRB-minus-180-day meeting, OAM and the sponsor (and PM, if not the ICE requestor) must agree to and establish in writing the specific documentation and personnel (including contractors) to which OAM will be given access and the schedule for responsive delivery of additional data when requested. Also at this meeting, the PM will deliver the POE and CARD. As negotiated, OAM will deliver its ICE, an explanatory briefing, and documentation to the sponsor in person on the date agreed.

.05 The ICE Assessment: OAM will assess the quality and completeness of an independently prepared ICE through application of best practices (see Resources) to ensure that the ICE is comprehensive, well-documented, accurate, and credible. The OAM may engage in clarifying discussions with the program/project and the ICE preparer as part of its assessment and direct ICE modifications to conform to these best practices.

.06 The ICE Revision: A high-profile program/project may be required to submit a revised ICE and CARD if it experiences a baseline deviation as defined above.

SECTION 7. RESOURCES.

.01 U.S. GAO, GAO Cost Estimating and Assessment Guide. Best Practices for Developing and Managing Capital Program Costs (GAO-09-3SP), March 2009 (or latest version) http://www.gao.gov/products/GAO-09-3SP

.02 Department of Defense, Cost Analysis Guidance and Procedures (DoD 5000.4-M),

December 11, 1992https://acc.dau.mil/CommunityBrowser.aspx?id=474366

.03 U.S. Air Force Instructions 65-508, Cost Analysis Guidance and Procedures, June 6, 2012 (or latest version)

http://webapp1.dlib.indiana.edu/cgi-bin/virtcdlib/index.cgi/821003/FID3/pubs/af/65/afi65-508/afi65-508.pdf

.04 Department of Defense Standard Practice, Work Breakdown Structures for Defense Materiel Items (DoD MIL-STD-881C), October 3, 2011 (or latest version)

https://acc.dau.mil/adl/en-US/482538/file/61223/MIL-STD%20881C%203%20Oct%2011.pdf

.05 Office of Management and Budget, The Capital Programming Guide: Supplement to OMB Circular A-11: Planning, Budgeting, and Acquisition of Capital Assets, July 2013 (or latest version)

http://www.whitehouse.gov/sites/default/files/omb/assets/a11_current_year/capital_programming_
guide.pdf

.06 Office of Management and Budget, OMB CircularA-131 (Revised), Value Engineering, December 26, 2013 (or latest version)

http://www.whitehouse.gov/sites/default/files/omb/assets/OMB/circulars/a131/a131-122013.pdf

Signed by: Deputy Secretary of Commerce

Office of Primary Interest:

Office of Acquisition Management