Major Capability Acquisition (MCA)
Full Rate Production (FRP) Decision
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Reference Source: DODI 5000.85 Section 3.14
The MDA will conduct an FRP decision review to assess the results of initial OT&E and initial manufacturing to determine whether to proceed to FRP. Proceeding to FRP requires control of the manufacturing process, acceptable performance and reliability, the establishment of adequate sustainment and support systems, and for MDAPs, an ICE and an ITRA. This decision will be informed by consideration of any new validated threat environments that might affect operational effectiveness. The MDA may consult with the requirements validation authority as part of the decision making process to ensure that capability requirements are current. The MDA will document the results of the review in an ADM.
See the Milestone Document Identification (MDID) tool for the statutory and regulatory information required.
Cost Questions at FRP Decision
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 cost estimate for the full-rate production decision, the analyst should consider key strategic questions, including:
- Are there alternative procurement profiles that result in a more affordable and efficient program?
- Could substantial savings be achieved through the use of a multiyear procurement contract for the program?
- What changes should be made to the sustainment strategy in the BCA?
Sustainment Questions at FRP Decision
Reference Source: DAG CH 4-3.4.3 FRP Decision Review
Key Sustainment Questions
- Are the sustainment metrics achievable by FOC?
- Are issues identified and mitigation plans in place?
- Is the core depot stand-up on track to meet the required date?
- Will program meet MSD and core depot schedules?
- Have fielding plans been adjusted for mitigation plans and ECPs?
- Are O&S affordability caps being met or on track to be met?
- Have updated CAPE ICE and SCP been reconciled?
- Do Acquisition and/or Service O&M budgets include product support element delivery?
- Have O&S Should Cost initiatives been completed and/or additional initiatives been established?
- Are results validated from operational data and additional analyses identified?
- Are should cost efforts underway to help reduce/control sustainment costs?
- How is feedback from fielding and operations incorporated into the program to drive should cost initiatives?
The PM’s main involvement in the FRP O&S Cost estimate is in the refinement of the CARD to reflect sustainment changes to the programmatic and technical baseline since Milestone C. For more on cost estimating, see Section 0.
As the program nears FRP, operational test and fielding data provides insight into major cost drivers and areas in which O&S Should Cost initiatives are likely to yield the greatest benefit. While there still may be modest, incremental opportunity to influence O&S Costs through engineering changes, the program should dedicate increasing effort to identifying Should Cost initiatives that target active cost management among the organizations and infrastructure supporting what may be a rapidly growing inventory of fielded systems.
Where a program’s sustainment planning includes interim contractor support, O&S Should Cost initiatives should seek contract incentives that align performance objectives with cost control objectives for the PSP or PSI. Should Cost initiatives may also yield benefits where they streamline or accelerate transition from contractor support to organic support. Additionally, shifting from a sole source commercial support provider to a competitive situation may constitute one or more O&S Should Cost initiatives as the program ramps to full fielding and steady state O&S. Where a program’s sustainment plan calls for longer term commercial support and demand variability sufficiently predictable to support fixed price contracting,
O&S Should Cost initiatives may center on establishing longer term performance-based arrangements at component, sub-system or system levels (see the PBL Guidebook).