Major Capability Acquisition (MCA)

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Milestone B

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Reference Source: DODI 5000.85 Section 3.10


The Milestone B decision authorizes a program to enter into the EMD phase and commit the required investment resources to support the award of phase contracts. Requirements for this milestone may have been satisfied at the Development RFP release decision point; however, if significant changes have occurred between the two decisions that would alter the decisions made at the earlier point, those changes will be addressed at the Milestone B review.


This review requires demonstration that all sources of risk have been adequately mitigated to support a commitment to design, development and production.  Risk sources include, but are not limited to, technology, threat projections, security, engineering, integration, manufacturing, sustainment and cost risk.  Validated capability requirements are required for all programs.  Full funding in the FYDP, compliance with affordability/program goals demonstrated through technical assessments and ICEs are required for MDAPs and programs in other categories when directed.



  • The MDA will approve entry into the EMD phase and formally initiate the program by approving the acquisition program baseline (APB).
  • The program decisions, EMD phase exit criteria, approval of the LRIP quantity, and specific technical event-based criteria for initiating production or fielding at Milestone C will be documented in an ADM.

See the Adaptive Acquisition Framework Document Identification (AAFDID) tool for the statutory and regulatory information required.

Cost Questions at Milestone B

Reference Source: DAG CH 2-3.4 Milestone Specific Analysis

At each milestone or decision point, the analyst should provide a holistic view of the program and not just an estimate of the proposed solution. The cost analyst should provide analysis to the decision maker which provides insight enabling the decision maker to answer two main questions:

  • Has the DoD fully funded the program of record within the Future Years Defense Program (FYDP)?
  • Is the program of record an affordable solution for the DoD’s needs?

Determining the answer to the first question is straightforward: namely, is there funding in the budget and the FYDP that corresponds to the amount of funding forecasted to be necessary to carry out the program? The answer to the second question is more complex, and the analysis will vary at each milestone. Specific strategic questions for analysis at each milestone are described below.

At all milestones, when presenting analysis that will help the decision maker determine whether the program of record is one that fulfills the DoD’s needs and that the DoD can afford, the analyst should provide insight into:

  • The cost of the solution
  • Time needed to achieve the solution
  • Whether the solution pushes the envelope on performance
  • Any potential cost in extending the life of the current materiel solution until the new proposed solution is operational
  • Whether the solution impacts the DoD Component’s portfolio by affecting other programs that are valuable to the DoD.

When conducting the Milestone B cost estimate, the key strategic questions the analyst should consider are:

  • What is the cost and performance trade space for the detailed materiel solution and other potential solutions?
  • Is the program affordable to both acquire and operate in the long term?
  • Are there alternative acquisition or programmatic strategies that can result in a more affordable and efficient program?
    • What is the nature and duration of competition for both prime and major subcontractors? What is the appropriate time to down select to one contractor?
    • Are there ways to invest in manufacturing efficiencies?
  • What technologies or strategies can be pursued to lower the overall sustainment cost?
    • What investments can be made in sustainability?
    • Have alternative sustainment strategies been considered in the BCA?
    • Is there a way to introduce competition into planned contractor logistics support for a system?

T&E Considerations

Reference Source: DAG CH 8-4.2.5 T&E Planning for Milestone B

The TEMP at Milestone B includes T&E information informing a variety of decisions, including:

  • Planning Decisions: What T&E is performed and how to phase it to support system development and design?
  • Management Decisions: Is the system ready to transition to the next development phase with associated exit criteria achieved and entrance criteria identified?
  • Design Decisions: Is technical performance as planned, including assessment of design margin? If not, how can we improve performance?
  • Contractual Decisions: How is performance best verified and does it work as specified?
  • Logistical Decisions: What T&E must be performed to ensure the system, subsystems, and components are designed for reliability, maintainability, and supportability, and remain reliable, maintainable, and supportable?
  • Acquisition Decisions: What T&E data are needed to support the decision?
  • Intelligence Mission Data: What data are available?

The PM identifies DT&E phases or events in the TEMP as contractor or government DT&E. Contractor and government DT&E should provide a continuum that provides confidence in the system, subsystem, and component design solutions. Major DT&E phases and events are planned with a test readiness review (TRR) that includes entrance and exit criteria. Integrated testing can also provide confidence in the system, subsystem, and component design solutions.

Programs will utilize government T&E capabilities, unless the program can identify a cost-effective exception. Additionally, programs must conduct a Cost Benefit Analysis (CBA) for exceptions to this policy, and document the assumptions and results of the CBA in the TEMP before acquiring non-government program-unique test facilities or resources.

The TEMP includes one or more reliability growth curves for reliability risk capabilities, components, and subcomponents, as appropriate. Growth program plans also include identification of contractor design for reliability activities.

Reference Source: DAG CH 8-4.2.6 T&E Reporting in Milestone B Decision

The risk associated with a Milestone B decision is based on evaluations of any available test data and test reports. T&E will have full and prompt access to all ongoing developmental testing, developmental test records, and test reports for all MDAP programs. Prompt access allows T&E to conduct assessments in the TMRR phase for:

  • Technology maturity
  • Performance of Critical Technology Element (CTEs) to meet CTPs or other performance parameter thresholds
  • Adequacy of executing the test plan submitted for the TMRR phase
  • Risk reduction
  • Request for Proposal (RFP)
  • Adequacy of test plan for EMD phase

Reference Source: DAG CH 8-4.2.7 T&E Role in Milestone B Decision

Milestone B serves as the point at which a program is reviewed for entrance into the Engineering & Manufacturing Development (EMD) phase. The role of T&E at Milestone B is to inform the Milestone Decision Authority (MDA) as to whether the:

  • Risks (technology, engineering, integration, safety, etc.) are understood and have been adequately mitigated.
  • System has met or exceeds all T&E-related TMRR phase exit criteria.

Sustainment Considerations

Reference Source: DODI 5000.85 3D.2.b.(6)

Corrosion Prevention and Control (CPC).

As part of the corrosion prevention and mitigation planning required by Section 2228 of Title 10, U.S.C., incorporate DoDI 5000.67-required CPC maintenance processes to mitigate the impact of corrosion on materiel readiness and sustainment costs.  Pursuant to Section 2366b of Title 10, U.S.C., DoD Components will identify and evaluate sustainment costs, including the costs related to corrosion prevention, throughout the life cycle.


Counterfeit Material Prevention.

Implement a risk-based process to prevent counterfeit material from entering into the DoD supply chain and to prevent the DoD acquisition of counterfeit material, pursuant to P.L. 112-81, and in accordance with DoDI 4140.67, DFARS 252.246-7007 and DFARS 252.246-2008.


Demilitarization and Disposal Planning.

  • In accordance with Volumes 1-3 of DoD Manual 4160.28, ensure compliance with statutory requirements to develop a disposal plan to include demilitarization and controlled inventory item coding of system, subsystems, or components, with sufficient lead time before the disposal or retirement of the first asset.
  • Pursuant to Section 2366b of Title 10, U.S.C., the DoD Component’s identification and evaluation of life-cycle sustainment costs prior to Milestone B will include disposal of the program.


Diminishing Manufacturing Sources and Material Shortages (DMSMS) and Obsolescence Management.

Pursuant to Section 803 of P.L. 113-66, implement a risk-based and proactive DMSMS/Obsolescence Management Plan to monitor materials, technologies, and items throughout the program life cycle.  Update the DMSMS and Obsolescence Management Plan and strategy on a recurring basis, no less than every 5 years.  Implement cost-effective resolutions of DMSMS/obsolescence issues before they negatively impact the program.  Ensure identification of obsolete parts in specifications and develop plans for suitable replacements as part of the program’s plan.


Financial Improvement and Audit Readiness.

Ensure program office internal controls are established at Milestone B for financial systems reporting processes (specifically those supporting logistics information systems pursuant to P.L. 112-239 and Section 524 of Title 40, U.S.C.) to support overarching supply accountability for all classes of supply.


“Should Cost” Management.

Utilize a management and analysis approach to identify and implement system and enterprise sustainment cost reduction initiatives.  “Should cost” targets will be established and reviewed annually based on analysis of acquisition sustainment costs and O&S cost element drivers.  PMs will capture PS metrics and cost data in DoD Component- and DoD-level information systems, and track performance against should-cost targets, pursuant to Section 837 of P.L. 115-91 and as implemented in DFARS Section 215.407-4.


System Modifications.
At Milestone C and beyond, ensure initiations of system modifications, as necessary, to improve performance, enhance sustainability, and reduce ownership costs, is consistent with limitations prescribed in Section 2244a of Title 10, U.S.C.

Sustainment Questions at Milestone B

Reference Source: DAG CH 4-3.2.4 Milestone B

Milestone B is the critical decision point in an acquisition program because it commits the organization’s resources to a specific product, budget profile, choice of suppliers, contract term, schedule, and sequence of events leading to production and fielding. For product support planning, many of these activities affect the effectiveness and cost of sustainment.

Key Sustainment Questions
  • Have metrics for availability, reliability, and cost been established?
  • Are requirements traceable to contractual design requirements?
  • How will the sustainment requirements be tested and verified?
  • Is a reliability growth plan in place?
  • Has core depot workload been estimated?
  • Is preliminary Depot Source of Repair complete?
  • Have O&S affordability caps been established?
  • Have CAPE ICE and SCP been reconciled?
  • Do RDT&E and acquisition budgets include product support element development and delivery?
  • Are O&S Should Cost initiatives initiated?
  • Are Source of Repair Analysis results, a Depot Source of Repair decision, projected core depot workload, and BCA results documented?

The Life Cycle Sustainment Plan (LCSP) is formally approved by the acquisition executive or that person’s designee prior to the Milestone B decision to enter into EMD.

In 10 USC 2366(b), provisions (3)(E) and (3)(F) require the MDA to certify to Congress that an MDAP has conducted sufficient logistics planning to inform an independent cost estimate and that the program has estimated core depot workload prior to approving entrance into EMD. The MDA-approved Milestone B LCSP, along with the approved Service Cost Estimate, meets the requirement. The Program Manager (PM) develops a projection of core depot workload (if any) in terms of projected man-hours, which will be required at Milestone B to satisfy the requirements for MDA certification that the program has met the requirements of 10 USC 2366b provision (3)(F) (see US Code).

Cost Estimating at Milestone B

Reference Source: DAG CH 4- Cost Estimating


In preparation for Milestone B, the PM should ensure revisions to the LCSP are factored into updates to the O&S Cost estimate. At Milestone B, the cost estimators update the LCCE, including O&S and disposal costs, by evaluating changes in sustainment assumptions since the Milestone A cost estimate. Changes to sustainment assumptions are likely due to key learning points resolved as part of the TMRR and reflected in the current programmatic and technical baseline of the system. Where O&S Should Cost initiatives identified in preparation for Milestone A and during TMRR have yielded results, cost estimators should adjust assumptions accordingly, and PMs should highlight such successes as part of the Milestone B preparation. The O&S Cost affordability analysis covers the entire planned service life of the system. An affordability cap, equivalent to a KPP, is established at Milestone B and documented in the program’s APB.

By the Milestone B decision, PMs should be investigating potential cost drivers based on design parameters for Should Cost Initiatives. For example, if the system designers expect that the repair time of a particular component is part of the critical path of the entire maintenance period, the PM may recommend a Should Cost initiative to reduce the repair time of that item. PMs also begin to evaluate if previous O&S Should Cost initiatives are delivering expected savings.

The PM should consider steps the program might take to ensure the viability of future O&S Should Cost initiatives. For instance, the PM may anticipate establishing a post-fielding Should Cost initiative that involves multi-vendor competition for supply support. A key success factor in implementing such a Should Cost initiative is the program’s access to and legal right to use part data in competitive procurements. Establishing the appropriate data rights assertions and beginning the process of pricing and procuring the data may be most cost effectively done through the EMD contract. The PM should record all O&S Should Cost initiatives in the LCSP. The LCSP annotated outline contains a full description of the Should Cost initiative information required to support the Milestone B decision.

Program Office Programming and Budget Activities

Reference Source: DAG CH 4- Resource Management

Funding for important logistics and sustainment-related studies and analysis following Milestone B include that needed to update the AoA, market research, and CAIV assessments, as well as to refine the Product Support BCA. Other funding considerations include corrosion prevention, Item Unique Identification (IUID), maintenance, supply chain management, sustaining engineering, and other plans.


RAM-C Analysis

Reference Source: DAG CH 4-3.2.2 Design Interface

The PM is an active participant in the RAM-C analysis to support the development of the RAM-C Rationale Report needed for the Development RFP Release and Milestone B. The PM should align the design of hardware intensive IPS elements, including support equipment and Packing, Handling, Storage, and Transportation (PHST) concurrently and in coordination with the system design to ensure R&M degradation factors are mitigated. This includes damage during maintenance, shock and vibration exposure in transportation and handling, exposure to extreme temperatures in transportation and storage, and relative humidity of the storage environment.