Volume 2B: Chapter 5: Research, Development, Test, and Evaluation Appropriations

DoD Financial Management Regulation Volume 2B, Chapter 5

+June 2004

CHAPTER 5

RESEARCH, DEVELOPMENT, TEST, AND EVALUATION APPROPRIATIONS

Table of Contents

0501 GENERAL ...................................................................................................................................................1

050101 Purpose ..................................................................................................................................................1

050102 Submission Requirements......................................................................................................................1

050103 Not Used ................................................................................................................................................1

050104 Preparation of Material ..........................................................................................................................1

050105 References .............................................................................................................................................1

0502 UNIFORM BUDGET AND FISCAL ACCOUNTING CLASSIFICATION.........................................2

050201 RDT&E Budget Activities.....................................................................................................................2

050202 Establishing RDT&E Program Elements...............................................................................................3

0503 PROGRAM AND BUDGET REVIEW SUBMISSION ...........................................................................4

050301 Purpose ..................................................................................................................................................4

050302 Submission Requirements......................................................................................................................4

0504 CONGRESSIONAL JUSTIFICATION/PRESENTATION ...................................................................6

050401 Purpose ..................................................................................................................................................6

050402 Organization of Justification Books ......................................................................................................6

0505 RDT&E APPROPRIATION SUBMISSION FORMATS .......................................................................8

050501 Purpose ..................................................................................................................................................8

050502 Exhibits in Support of Section 0503 – Program and Budget Review Submission ................................9

050503 Exhibits in Support of Section 0504 - Congressional Justification .......................................................9

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CHAPTER 5

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RESEARCH, DEVELOPMENT, TEST, AND EVALUATION APPROPRIATIONS

0501 GENERAL

050101 Purpose

This chapter provides instructions on budget formulation and congressional justification for Research,

Development, Test, and Evaluation (RDT&E) appropriations. The following appropriations are included in

RDT&E:

- RDT&E, Army (2040A)

- RDT&E, Navy (1319N)

- RDT&E, Air Force (3600F)

- RDT&E, Defense-Wide (0400D)

- Operational Test and Evaluation, Defense (0460D)

050102 Submission Requirements

General guidance on submission requirements is in Chapter 1. Chapter 5 provides additional specific

requirements on justification material for the above appropriations. Other chapters in the FMR require additional

exhibits. The Components will also submit any exhibits required by OMB Circular A-11, Preparation and

Submission of Budget Estimates.

050103 Not Used

050104 Preparation of Material

General guidance on format and preparation of material is presented in Chapter 1. Chapter 5 provides additional

specific requirements on justification material required for RDT&E appropriations.

050105 References

Section 010210 provides policies and definitions concerning costs that are to be financed in RDT&E.

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0502 UNIFORM BUDGET AND FISCAL ACCOUNTING CLASSIFICATION

050201 RDT&E Budget Activities

The RDT&E budget activities are broad categories reflecting different types of RDT&E efforts. The

definitions are provided below.

Budget Activity 1, Basic Research. Basic research is systematic study directed toward greater knowledge or

understanding of the fundamental aspects of phenomena and of observable facts without specific applications

towards processes or products in mind. It includes all scientific study and experimentation directed toward

increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental,

and life sciences related to long-term national security needs. It is farsighted high payoff research that provides the

basis for technological progress. Basic research may lead to: (a) subsequent applied research and advanced

technology developments in Defense-related technologies, and (b) new and improved military functional

capabilities in areas such as communications, detection, tracking, surveillance, propulsion, mobility, guidance and

control, navigation, energy conversion, materials and structures, and personnel support. Program elements in this

category involve pre-Milestone A efforts.

Budget Activity 2, Applied Research. Applied research is systematic study to understand the means to meet

a recognized and specific need. It is a systematic expansion and application of knowledge to develop useful

materials, devices, and systems or methods. It may be oriented, ultimately, toward the design, development, and

improvement of prototypes and new processes to meet general mission area requirements. Applied research may

translate promising basic research into solutions for broadly defined military needs, short of system development.

This type of effort may vary from systematic mission-directed research beyond that in Budget Activity 1 to

sophisticated breadboard hardware, study, programming and planning efforts that establish the initial feasibility and

practicality of proposed solutions to technological challenges. It includes studies, investigations, and non-system

specific technology efforts. The dominant characteristic is that applied research is directed toward general military

needs with a view toward developing and evaluating the feasibility and practicality of proposed solutions and

determining their parameters. Applied Research precedes system specific technology investigations or

development. Program control of the Applied Research program element is normally exercised by general level of

effort. Program elements in this category involve pre-Milestone B efforts, also known as Concept and Technology

Development phase tasks, such as concept exploration efforts and paper studies of alternative concepts for meeting

a mission need.

Budget Activity 3, Advanced Technology Development (ATD). This budget activity includes development

of subsystems and components and efforts to integrate subsystems and components into system prototypes for field

experiments and/or tests in a simulated environment. ATD includes concept and technology demonstrations of

components and subsystems or system models. The models may be form, fit and function prototypes or scaled

models that serve the same demonstration purpose. The results of this type of effort are proof of technological

feasibility and assessment of subsystem and component operability and producibility rather than the development of

hardware for service use. Projects in this category have a direct relevance to identified military needs. Advanced

Technology Development demonstrates the general military utility or cost reduction potential of technology when

applied to different types of military equipment or techniques. Program elements in this category involve pre-

Milestone B efforts, such as system concept demonstration, joint and Service-specific experiments or Technology

Demonstrations and generally have Technology Readiness Levels of 4, 5, or 6. Projects in this category do not

necessarily lead to subsequent development or procurement phases, but should have the goal of moving out of

Science and Technology (S&T) and into the acquisition process within the future years defense program (FYDP).

Upon successful completion of projects that have military utility, the technology should be available for transition.

Budget Activity 4, Advanced Component Development and Prototypes (ACD&P). Efforts necessary to

evaluate integrated technologies, representative modes or prototype systems in a high fidelity and realistic operating

environment are funded in this budget activity. The ACD&P phase includes system specific efforts that help

expedite technology transition from the laboratory to operational use. Emphasis is on proving component and

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subsystem maturity prior to integration in major and complex systems and may involve risk reduction initiatives.

Program elements in this category involve efforts prior to Milestone B and are referred to as advanced component

development activities and include technology demonstrations. Completion of Technology Readiness Levels 6 and

7 should be achieved for major programs. Program control is exercised at the program and project level. A logical

progression of program phases and development and/or production funding must be evident in the FYDP.

Budget Activity 5, System Development and Demonstration (SDD). SDD programs have passed Milestone

B approval and are conducting engineering and manufacturing development tasks aimed at meeting validated

requirements prior to full-rate production. This budget activity is characterized by major line item projects and

program control is exercised by review of individual programs and projects. Prototype performance is near or at

planned operational system levels. Characteristics of this budget activity involve mature system development,

integration and demonstration to support Milestone C decisions, and conducting live fire test and evaluation

(LFT&E) and initial operational test and evaluation (IOT&E) of production representative articles. A logical

progression of program phases and development and production funding must be evident in the FYDP consistent

with the Department’s full funding policy.

Budget Activity 6, RDT&E Management Support. This budget activity includes research, development, test

and evaluation efforts and funds to sustain and/or modernize the installations or operations required for general

research, development, test and evaluation. Test ranges, military construction, maintenance support of laboratories,

operation and maintenance of test aircraft and ships, and studies and analyses in support of the RDT&E program are

funded in this budget activity. Costs of laboratory personnel, either in-house or contractor operated, would be

assigned to appropriate projects or as a line item in the Basic Research, Applied Research, or Advanced Technology

Development program areas, as appropriate. Military construction costs directly related to major development

programs are included.

Budget Activity 7, Operational System Development. This budget activity includes development efforts to

upgrade systems that have been fielded or have received approval for full rate production and anticipate production

funding in the current or subsequent fiscal year. All items are major line item projects that appear as RDT&E Costs

of Weapon System Elements in other programs. Program control is exercised by review of individual projects.

Programs in this category involve systems that have received Milestone C approval. A logical progression of

program phases and development and production funding must be evident in the FYDP, consistent with the

Department’s full funding policy.

050202 Establishing RDT&E Program Elements

A. The program element is the primary data element in the Future Years Defense Program (FYDP) and is

the major aggregation, at which RDT&E efforts are organized, budgeted and reviewed. All funding associated with

a major system new start should be identified in a unique program element. Requests to establish program elements

should be forwarded to OSD Program Analysis and Evaluation for coordination and approval. Instructions are

contained in DoD 7045.7-H, “The FYDP Program Structure Handbook.”

B. In general, the coding symbology identifies the RDT&E budget activity for the program element.

Program elements in RDT&E budget activities 1 through 6 will have “06” in the first two positions; “06”indicates it

is part of Major Force Program 6, Research and Development. The third and fourth position will identify the

specific budget activity (e.g., 0602 is an RDT&E budget activity 2 program element). Program elements in RDT&E

budget activity 7 reflect the Major Program of the fielded system in the first two positions (e.g., “01” indicates a

strategic system).

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0503 PROGRAM AND BUDGET REVIEW SUBMISSION

050301 Purpose

This section prescribes instructions for the preparation and submission of the budget estimates for the

RDT&E appropriations. Unless otherwise specified, these instructions apply to all RDT&E appropriations and to

all budgets. See

Chapter 1, Section 0104, for specific printing requirements.

050302 Submission Requirements

A. Administrative Requirements.

1. Classification. Information contained in the budget requests should be unclassified. Where classified

information is required in order to explain the program, the classified material will be provided under separate cover

and appropriately marked.

2. Exhibits will display the actual fiscal years (i.e., PYs, FY 2002, FY 2003, FY 2004, FY 2005,

FY 2006, FY 2007, FY 2008, and FY 2009.) rather than the template entries (i.e., PY, CY, BY1, BY2, BY2+1,

BY2+2, BY2+3, and BY2+4).

3. If an amended budget is submitted, identify the revised budget exhibits accordingly.

4. All pages will be annotated with the applicable R-1 line item number and page number within the line

item (Item 1-1 of 5, 1-2 of 5, 2-1 of 1, 3-1 of 20, etc.) at the bottom center or bottom right of each page. Be

consistent for all pages of the backup book.

5. If printing the RDT&E material in one volume is impractical, the justification material can be

submitted by budget activity with the Science and Technology budget activities (BA 1 through BA 3) printed in one

volume and the remaining budget activities printed in a separate volume or in individual volumes. Each volume

should include an R-1 listing and a table of contents indicating the volume and page where the applicable program

element can be found. The justification material will be entitled

Fiscal Year 20BY1/20BY2 Program and Budget Review Submission

RDT&E Descriptive Summaries, Volume I

Month/Year (of Submission)

6. Each backup book will include a discussion of performance metrics in support of requests

for program resources, as prescribed in

Chapter 1, Section 010109. Where programs have participated

with the Office of Management and Budget (OMB) in the completion of the Program Assessment Rating

Tool (PART), the PART summary may be included to fulfill this requirement. Components may also use

existing performance measures or create new ones in compliance with this requirement.

B. Component-generated exhibits can be used in lieu of the following exhibits as long as they include all the

information required by the exhibits in a usable format. The exhibits will be aggregated in the following order for

each R-1 line item and submitted in R-1 line item order. The required exhibits shall be packaged in the following

order, as applicable: R-2 (PE 1), R-2a (PE 1, Project or Future Naval Capability A), R-3 (PE 1, Project or Future

Naval Capability A), R-4 (PE 1, Project or Future Naval Capability A), R-2a (PE 1, Project or Future Naval

Capability B), R-3 (PE 1, Project or Future Naval Capability B), R-4 (PE 1, Project or Future Naval Capability B),

etc.

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Arrangement of Exhibits - General

R-1 RDT&E Program

R-1C RDT&E Program - Comparison Report

R-2 RDT&E Budget Item Justification

R-2a RDT&E Project Justification

R-3 RDT&E Project Cost Analysis

R-4 RDT&E Program Schedule Profile

R-4A RDT&E Program Schedule Detail

R-5 Termination Liability in Major Acquisition Program RDT&E Contracts

DD 1391 Military Construction Project Data

C. Facilities Exhibit. For improvements to and construction of government-owned facilities funded in

RDT&E, a DD Form 1391, Military Construction Project Data, will be provided separately for each budget year

project and any PY or CY projects not previously reported. These exhibits will be included with the program

element justification. In addition, a copy of all DD Forms 1391 should be packaged together and a copy provided to

the OUSD(C) P/B Investment Directorate (4B915) and to the Military Construction Directorate (3D840). A copy of

the form and the instructions are in

Chapter 6.

D. MAX Schedule C. OMB Circular No. A-11 has incorporated the requirements for this research and

development exhibit into the automated MAX schedule C. Subsequent instructions will be provided by the Office

of the Director, Defense Research and Engineering, Plans and programming Division (POC: 703-695-0005)

regarding the specific requirements for this submission to OMB’s MAX system.

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0504 CONGRESSIONAL JUSTIFICATION/PRESENTATION

050401 Purpose

This section presents the justification book organization and the exhibit requirement for submission to

Congress. Preferred budget exhibit formats can be found in Section 0505. See

Chapter 1, Section 0104, for specific

printing requirements.

050402 Organization of Justification Books

A. Administrative Requirements.

1. Classification. Information contained in the budget requests should be unclassified. Where classified

information is required in order to explain the program, the classified material will be provided under separate cover

and appropriately marked.

2. Exhibits will display the actual fiscal years (i.e., PYs, FY 2002, FY 2003, FY 2004, FY 2005,

FY 2006, FY 2007, FY 2008, and FY 2009.) rather than the template entries (i.e., PYs, PY, CY, BY1, BY2,

BY2+1, BY2+2, BY2+3, and BY2+4).

3. All pages will be annotated with the applicable R-1 line item number and page number within the line

item (Item 1-1 of 5, 1-2 of 5, 2-1 of 1, 3-1 of 20, etc.) at the bottom center or bottom right of each page. Be

consistent for all pages of the backup book.

4. If printing the RDT&E material in one volume is impractical, the justification material can be

submitted by budget activity with the Science and Technology budget activities (BA 1 through BA 3) printed in one

volume and the remaining budget activities printed in a separate volume or in individual volumes. Each volume

should include an R-1 listing and a table of contents indicating the volume and page where the applicable program

element can be found.

5. Each backup book will include a discussion of performance metrics in support of requests for

program resources, as prescribed in

Chapter 1, Section 010109. Where programs have participated with the Office

of Management and Budget (OMB) in the completion of the Program Assessment Rating Tool (PART), the PART

summary may be included to fulfill this requirement. Components may also use existing performance measures or

create new ones in compliance with this requirement.

B. Justification material will be entitled:

RDT&E Descriptive Summaries for

Fiscal Year 20BY1/20BY2 President's Budget

February 2003

Volume I

C. Service-generated and Defense Agency-generated exhibits can be used in lieu of the following exhibits as

long as they include all the information required by the exhibits in a usable format. The exhibits will be aggregated

in the following order for each R-1 line item and submitted in R-1 line item order. The required exhibits shall be

packaged in the following order, as applicable: R-2 (PE 1), R-2a (PE 1, Project or Future Naval Capability A), R-3

(PE 1, Project or Future Naval Capability A), R-4, (PE 1, Project or Future Naval Capability A), R-2a (PE 1, Project

or Future Naval Capability B), R-3 (PE 1, Project or Future Naval Capability B), R-4 (PE 1, Project or Future Naval

Capability B), etc.

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Arrangement of Exhibits - General

R-1 RDT&E Program (OSD Generated) (Include in the backup book, if available.)

R-2 RDT&E Budget Item Justification

R-2a RDT&E Project Justification

R-3 RDT&E Project Cost Analysis

R-4 RDT&E Program Schedule Profile

R-4a RDT&E Program Schedule Detail

R-5 Termination Liability in Major Acquisition Program RDT&E Contracts

DD 1391 Military Construction Project Data

D. Facilities Exhibit. For improvements to and construction of government-owned facilities funded in

RDT&E, a DD Form 1391, Military Construction Project Data, will be provided separately for each budget year

project and any PY or CY projects not previously reported. These exhibits will be included with the program

element justification. In addition, a copy of all DD Forms 1391 should be packaged together and a copy provided to

the Military Construction Directorate (3D840). A copy of the form and the instructions are in

Chapter 6.

E MAX Schedule C. OMB Circular No. A-11 has incorporated the requirements for this research and

development exhibit into the automated MAX schedule C. Subsequent instructions will be provided by the Office

of the Director, Defense Research and Engineering, Plans and Programming Division (POC: 703-695-0005)

regarding the specific requirements for this submission to OMB’s MAX system.

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0505 RDT&E APPROPRIATION SUBMISSION FORMATS

050501 Purpose

The formats provided on the following pages reflect requirements presented in previous sections of this

chapter. Formats currently being used within each Service and Defense Agency may be used in lieu of the formats

contained in Section 050502 as long as all of the information required by the exhibits in Section 050502 is provided

in a usable format. With this exception and unless modified in an Office of the Under Secretary of Defense

(Comptroller) budget submission memorandum, the formats in these exhibits shall be used.

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050502 Exhibits in Support of Section 0503 – Program and Budget Review Submission

R-1, RDT&E Programs .......................................................................................................................................10

R-1C, RDT&E Programs - Comparison Report ..................................................................................................11

R-2, RDT&E Budget Item Justification ..............................................................................................................12

R-2a, RDT&E Project Justification .....................................................................................................................13

R-3 Cost Analysis................................................................................................................................................17

R-4, Schedule Profile...........................................................................................................................................21

R-4a, Schedule Detail ..........................................................................................................................................22

R-5 Termination Liability in Major Acquisition Program RDT&E Contracts....................................................24

050503 Exhibits in Support of Section 0504 - Congressional Justification

R-1, RDT&E Programs .......................................................................................................................................10

R-2, RDT&E Budget Item Justification ..............................................................................................................12

R-2a, RDT&E Project Justification .....................................................................................................................13

R-3 Cost Analysis................................................................................................................................................17

R-4, Schedule Profile...........................................................................................................................................21

R-4a, Schedule Detail ..........................................................................................................................................22

R-5 Termination Liability in Major Acquisition Program RDT&E Contracts....................................................24

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Exhibit R-1, RDT&E Programs

Department of the _____________

Appropriation: ___________________________ Date: ________________

TOA, $ in Millions

Program Past Current Budget Budget

R-1 Line Element Budget Year Year Year 1 Year 2

Item No Number

Item Activity Cost Cost Cost Cost

Exhibit R-1, RDT&E Programs

(Exhibit R-1, page 1 of 2)

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Instructions - Exhibit R-1, RDT&E Programs

I. General.

A. Unless otherwise specified, this format will be used to present the Research, Development, Test and

Evaluation (RDT&E) program to:

1. The Office of the Under Secretary of Defense (Comptroller) in support of the OSD/OMB budget review

and,

2. The Congress in support of the President’s budget request.

II. RDT&E Line Item Content.

A. The basic document for presenting RDT&E requirements is the Exhibit R-1, RDT&E Programs. The R-1

line items are program elements, which define a development effort with specific design, cost, schedule and

capability parameters. All costs of basic and applied scientific research, development, test, and evaluation,

including maintenance, rehabilitation, and lease/operation of facilities and equipment will be included in appropriate

R-1 line items.

B. The R-1 exhibit will contain the following information:

1. Program element title and number. Appropriate security classification coding should be included as part

of each program element title listed. All classified material should be bracketed.

2. Line items will be arranged in ascending program element order within each budget activity.

3. Approved funding for the past year (PY), the current year (CY), budget year 1 (BY1), and BY2.

4. Summaries by (1) Budget Activities and (2) FYDP Programs.

Exhibit R-1C, RDT&E Programs - Comparison Report

The R-1C Comparison Report will provide a comparison between the last President’s budget request and the current

program budget review submission. The comparison should identify the changes for each RDT&E appropriation by

R-1 line item. The report should also identify appropriation and budget activity totals for each fiscal year for the PY

through BY2+4 timeframe. If it is necessary to submit classified data, then it should be submitted in a separate

report. The unclassified report must match the total for the appropriation/account being submitted. This report will

not be included in the justification material provided to the Congress.

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Exhibit R-2, RDT&E Budget Item Justification Date: Month/Year

Appropriation/Budget Activity

RDT&E.A BA #

R-1 Item Nomenclature:

Program Element (PE) Name and Number

Cost ($ in millions) FY PY FY CY FY BY

FY BY

2+1

FY BY

2+2

FY BY

2+3

FY BY

2+4

Total PE Cost

Project A or Future Naval Capability

Name/No./Subtotal Cost

Project B or Future Naval Capability

Name/No./Subtotal Cost

A. Mission Description and Budget Item Justification: Provide a description and justification. Identify the military requirement(s) that this

program will meet. Identify new start efforts for the budget year(s) within the program element and new start efforts since the previous

President's budget. New start information can be displayed on the R-2a rather than the R-2.

Program Change Summary: (Show total funding, schedule, and technical changes for the program element that have occurred

since the previous President's Budget Submission)

FY PY FY CY FY BY

FY BY

Previous President's Budget

Current BES/President's Budget

Total Adjustments

Congressional program reductions

Congressional rescissions

Congressional increases

Reprogrammings

SBIR/STTR Transfer

C. Other Program Funding Summary: (use only when single project PE; otherwise display on R-2a)

To Total

PY CY BY

2+1

2+2

2+3

2+4

Complete Cost

P-1 Procurement Line Item No., Name: Provide related funding detail as indicated, Use a continuation page as necessary.

C-1 MilCon Project No., Name: Provide related funding detail as indicated, Use a continuation page as necessary.

Related RDT&E: List PE numbers and names. It is not necessary to include the related RDT&E funding profile

unless there is a funding dependency between the RDT&E programs.

D. Acquisition Strategy. *

E. Performance Metrics: (as applicable. See Sec. 050302.6 and Sec. 050401.5)

* Not required for Budget Activities 1, 2, 3, and 6.

If an Exhibit R-2a is required, complete only section A and B on the R-2 (summarize for the program element). With the exception of the

program change summary, all sections are required on the R-2a for each project.

R-1 Line Item No. XX

Page-X of X

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Exhibit R-2a, RDT&E Project Justification

Date: Month/Year

Appropriation/Budget Activity

RDT&E.A BA #

Project Name and Number

Cost ($ in millions) FY PY FY CY FY BY

FY BY

2+1

FY BY

2+2

FY BY

2+3

FY BY

2+4

Project Name or Future Naval Capability

/No./Subtotal Cost

RDT&E Articles Quantity * (as

applicable)

C. Mission Description and Budget Item Justification: Provide a project overview. For BAs 1, 2 and 3, specify the technology area as defined in annual

budget guidance.

B. Accomplishments/Planned Program

FY PY FY CY FY BY

FY BY

Accomplishment/ Effort/Subtotal Cost

RDT&E Articles Quantity *(as applicable)

Provide a brief description using key terms of the accomplishment and/or planned program. Include objectives, output or end product, and specific

program name or major technology effort. For BAs 1, 2, and 3 also include specific technology terms as defined in budget guidance or provided by the

DDR&E.

Identify new start efforts for the budget year(s) within the project and those since the previous President's Budget

FY PY FY CY FY BY

FY BY

Accomplishment/ Effort/Subtotal Cost

RDT&E Articles Quantity *(as applicable)

Provide a brief description using key terms of the accomplishment and/or planned program. Include specifics, objectives, output or end product, and

specific program name or major technology effort. For BAs 1, 2, and 3 also include specific technology terms as defined in budget guidance or provided by

DDR&E. Identify new start efforts for the budget year(s) within the project and those since the previous President's Budget.

C. Other Program Funding Summary: To Total

PY CY

2+1

2+2

2+3

2+4

Complete Cost

P-1 Procurement Line Item No., Name: Provide related funding detail as indicated, Use a continuation page as necessary.

C-1 MilCon Project No., Name: Provide related funding detail as indicated, Use a continuation page as necessary.

Related RDT&E: List PE numbers and names. It is not necessary to include the related RDT&E funding profile

unless there is a funding dependency between the RDT&E programs.

D. Acquisition Strategy. *

E. Major Performers: List major contractors, universities, colleges, government facilities, federally funded research and development centers, laboratories,

centers, or other organizations contributing to this effort through BY

2. Only list those who were primary recipients of funds (e.g., received 15% or over

$10 million, whichever is less). Include name or titles, locations, and brief description of work performed. Include actual or projected award date

(month/year).

* Not required for Budget Activities 1, 2, 3, and 6.

R-1 Line- Item No. XX

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(Exhibit R-2a, Page X of X)

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Instructions

Exhibit R-2, RDT&E Budget Item Justification

Exhibit R-2a, RDT&E Budget Item Justification (Project)

General. An Exhibit R-2 shall be prepared for each program element. For budget activities 1, 2 and 3, an Exhibit

R-2a shall be prepared for each project, even if there is only one project. For all budget activities, an Exhibit R-2a

shall be prepared for each program element having more than one project and shall break out and discuss each

project that has funding greater than $1 million in budget year 1 or budget year 2. An exception to this criterion

would be that projects with funding less than $1 million that contain a new start effort beginning in the budget year.

Exhibits must be prepared for new start project.. Care should be taken to see that exhibits are clear and concise.

Abbreviations shall be identified on the page on which they occur.

These pages shall be printed on 8 1/2 by 11-inch paper in landscape format. Classified material shall be submitted

separately so that the RDT&E backup book can be submitted in an unclassified version.

Date. Include the month and year of submission of the exhibit. If an Amended Budget is submitted, identify the

date of the revised submission.

Appropriation (Treasury) Code Budget Activity. Identify the appropriation and budget activity. The budget activity

must match the RDT&E service annex and data base lock position.

R-1 Item Nomenclature. Identify the name of the R-1 line item.

Program Element Number. Identify the program element.

Project Number and Nomenclature. Identify the project number and nomenclature.

Resource Summary. The Exhibit R-2 shall include a fiscal resource summary total for the total program element

and, if there is more than one project in that program element, a fiscal resource summary for each project in that

program element. Ensure the funding matches the RDT&E service annex and data base lock position and that total

costs for Acquisition Category 1 programs are consistent with Selected Acquisition Reports. Identify Defense

Emergency Response Funds (DERF) funds provided for the program/project by either inserting a resource line or by

using a footnote immediately below the resource summary

Mission Description and Budget Item Justification. The R-2 shall include a description and justification of the

efforts included in the program element. The R-2a shall include a description and justification of the efforts

included in the specific project. The justification narratives shall be included for the past year (PY), the current year

(CY), and the budget year 1 (BY1) and BY2 in a bullet format. Typically at least three separate activities and

associated funding shall be identified for each program element (or project if on the R-2a) in each fiscal year. The

total funding reflected in the bullet narratives should match the total of program element (or project) funding.

Identify Defense Emergency Response Funds (DERF) funds provided for the program/project by either inserting a

resource line or by using a footnote immediately below the resource summary. Identify when a program element or

a project was previously funded in a different program element. If program element restructuring and project

realignment diminish the value of cumulative fiscal resource information for FY PY, this column shall be footnoted

with an explanation of the program elements that were restructured and realigned. Identify the test articles

(engineering development models, test articles, low rate initial production test articles, government furnished

equipment articles, etc.) that are being procured and why.

Program Change Summary. If there have been changes to the total funding, schedule, or technical parameters since

the previous President’s budget submission, the Exhibit R-2 shall include a concise narrative summary explaining

the changes in the total program element.

(Exhibit R-2, page 3 of 4)

5-15

Instructions - Exhibits R-2 and R-2a (Continued)

Other Program Funding Summary. Development projects often lead to subsequent development phases, production,

and military construction. Also, some projects may depend on concurrent development in other projects. These

related efforts and the funding profiles for other appropriation efforts shall be identified by appropriation, budget

activity, R-1 line item and program element, and P-1 line item title and number. If there are funding dependencies

among related research, development, test, and evaluation programs, then the funding profiles for these related

programs shall be included.

Acquisition Strategy. An explanation of acquisition, management, and contracting strategies shall be provided for

each project. This section is not required for Program Elements in Budget Activities 1,2, and 3.

Major Performers. This data is required for the program budget review submission only.

Performance Metrics: (as applicable. See section 050305.A.6 and 050402.A.5

Formats currently being used within each Service and Defense Agency may be used and as long as they include all

the information required in a usable format.

(Exhibit R-2, page 4 of 4)

5-16

Exhibit R-3 Cost Analysis

Date:

APPROPRIATION/BUDGET ACTIVITY PROGRAM ELEMENT PROJECT NAME AND NUMBER

Cost Categories

Contract

Performing

Total

BY1

BY2

Target

(Tailor to WBS, or System/Item

Method

Activity &

PYs CY

Award BY1

Award BY2

Award Cost To Total

Value of

Requirements)

& Type

Location

Cost Cost

Date Cost

Date Complete Cost

Contract

Primary Hardware Development

Ancillary Hardware Development

Systems Engineering

Licenses

Tooling

GFE

Award Fees

Subtotal Product Development

Remarks:

Development Support

Software Development

Training Development

Integrated Logistics Support

Configuration Management

Technical Data

GFE

Subtotal Support

Remarks

R-1 Line Item No XX

(Exhibit R-3, page 1 of 4)

5-17

Exhibit R-3 Cost Analysis (page 2)

Date:

APPROPRIATION/BUDGET ACTIVITY PROGRAM ELEMENT PROJECT NAME AND NUMBER

Cost Categories

Contract

Performing

Total

BY1

BY2

Target

(Tailor to WBS, or System/Item

Method

Activity &

PYs CY

Award BY1

Award BY2

Award Cost To Total

Value of

Requirements)

& Type

Location

Cost Cost

Date Cost

Date Complete Cost

Contract

Developmental Test & Evaluation

Operational Test & Evaluation

Tooling

GFE

Subtotal T&E

Remarks

Contractor Engineering Support

Government Engineering Support

Program Management Support

Program Management Personnel

Travel

Labor (Research Personnel)

Overhead

Subtotal Management

Remarks

Total Cost

Remarks

R-1 Line Item No XX

(Exhibit R-3, page 2 of 4)

5-18

Instructions - Exhibit R-3, RDT&E Project Cost Analysis

General: The R-3 exhibit is required only for projects with funding greater than $1 million in budget year 1 or

budget year 2 for programs funded in budget activities 4, 5, and 7 only. A separate R-3 exhibit shall be prepared for

each project in an applicable R-1 line item. These exhibits shall be printed on 8 1/2 by 11 inch paper in landscape

format. If a program element is not divided into projects, then the program element itself is defined as a project for

purposes of submitting an R-3 exhibit and the R-3 exhibit and instructions apply to the entire program element.

Classified material shall be submitted separately.

Date: Identify the month and year of submission of the exhibit. If an Amended Budget is submitted, identify the

date of the revised submission.

Appropriation/Budget Activity. Identify the appropriation and budget activity. The budget activity must match the

RDT&E service annex and data base lock position.

R-1 Item Nomenclature: Identify the name of the R-1 line item.

Program Element Number: Identify the number of the program element.

Project Number and Nomenclature: Identify the project number and nomenclature on each R-3 page.

Project Cost Categories. Cost information shall be provided for each project with funding greater than $1 million in

budget year 1 or budget year 2, with project costs broken down into cost categories. Sample cost categories shown

are typical of various types of defense research and development efforts. Costs shall be distributed among

categories in accordance with the project work breakdown structure (WBS) or other categories used by the project

office in project execution. The illustrated sample cost categories may be used if these correspond to the project's

structure; however, there is no requirement to use cost categories other than those used by the project office in

project execution. Sample cost categories not used in project execution need not be included in the exhibit for that

project. If the program office tracks efforts by major contract, then display the information accordingly. The cost

categories shall be separated into 4 information categories as follows:

Product Development. Efforts associated with the delivery of a fully integrated system that are in direct

support of the system and essential to the development, training, operation, and maintenance of the system. Include

all efforts directly supporting system development and delivery to include primary contracts, major component

contracts, contracted services, in-house support, and government furnished property. Contracts or government

efforts greater than $1 million in any displayed budget year shall be reported individually.

Support Costs. Efforts not directly associated with the delivery of the primary product, including technical

engineering services, research studies, and technical support not related directly to product development or to

testing and evaluation. Contracts or government efforts greater than $1 million in any displayed budget year shall

be reported individually.

Test and Evaluation. Efforts (other than those included within contracts or government efforts included

above) associated with engineering or support activities to determine the acceptability of a system, subsystem, or

component. Contracts or government efforts greater than $1 million in any displayed budget year shall be reported

individually.

Management Services. Efforts associated with services provided in support of program office management

and administration processes such as: program oversight, resource justification, budget and programming,

milestone and schedule tracking. Federally Funded Research and Development Centers (FFRDCs) are in this

category. Contracts or government efforts greater than $1 million in any displayed budget year shall be reported

individually.

(Exhibit R-3, page 3 of 4)

5-19

Instructions - Exhibit R-3, RDT&E Project Cost Analysis (Continued)

Government Furnished Property. Property, such as hardware, software, or information, which the government is

contractually obligated to furnish a contractor or government performing activity shall be identified. Provide a brief

identification of the item to be provided, and the contractor or government activity providing the item. Provide

estimated date that the government furnished property will be provided to the requiring contractor or activity.

Provide the name of the requiring contractor or activity.

Award Fees. Identify amounts budgeted for award fees and indicate contractor performance and percentage of

award fees actually awarded in past award fee periods.

Contract Method/Type or Funding Vehicle. The following codes shall be used to identify the contract method,

contract type, and funding vehicle:

Contract Type Contract Method

FP - Fixed Price SS - Sole Source

CPIF - Cost Plus Incentive Fee C- Competitive

FPI - Fixed Price Incentive

CPAF - Cost Plus Award Fee

CPFF - Cost Plus Fixed Fee

FFP - Firm Fixed Price

Funding Vehicle (when a government agency is the performing activity)

MIPR - Military Interdepartmental Purchase Request

PO - Project Order

WR - Work Request

Allot - Allotment

Reqn - Requisition

Performing Organizations. Identify each contractor and government or performing activity and the location for

each effort greater than $1 million in any of the displayed years.

Total PY Cost. Provide actual amounts for the total of all years before the current year (CY).

CY - BY2. Provide actual or budget amounts for each year for current year (CY), budget year (BY1), and BY2.

Award or Obligation Date. Provide actual or estimated date of contract award or the estimated date that funds will

be obligated to government performing activities.

To Complete. Provide the amount required to complete this effort beyond BY2.

Total Program. Provide the cumulative total of all budgeted funds for the program (including funds

obligated/budgeted for PYs, CY, BY1, BY2, and to complete). Provide a comment in the Remarks section when

the Project Office Estimate at Completion (EAC) differs from the total cost. Also provide a comment when the

Performing Activity EAC differs from the Project Office EAC.

Target Value of Contract. Identify the target value of the contract and explain those cases where total cost differs

significantly. For example, if the budget is at ceiling value of the contract vice target value or if budget is "program

manager's best estimate" vice target value, then explain.

Formats currently being used within each Service and Defense Agency may be used in lieu of this format.

(Exhibit R-3, page 4 of 4)

5-20

Exhibit R-4, Schedule Profile

Date: ( Month and Year )

PY CY BY1

Fiscal Year

1 2 3 4 1 2 3 4 12 3 41234 123412341234 1 2 3 4

123 4 5 6 7

Software Delivery

1XXSW

2XXSW

MS II MS C

IIA TECHEVAL

OT AI OT BI

(

)

(

)

(

)

(

)

(

)

Appropriation/Budget Activity Program Element Number and Name Project Number and Name

BY2 BY2+1 BY2+2 BY2+3 BY2+4

Acquisition

Milestones

Prototype Phase

Radar System

Development

ABC Radar

Delivery

Flight Test

Developmt Test

Continuous DT

Production

Milestones

LRIP I FY BY2

LRIP II FY BY2+1

FRP FY BY2+2

Deliveries

FRP

(U) T&E Milestones

First De ment

DT DT IIBI DT IIB2 DT IIC

OT IIC OPEVAL

LRIP I

LRIP II

FRP FRP Start

Lot 25 Lot 26 Lot 27 Lot 28

Lot 29 (42) Lot 30 (42)

Lot 24

R-1 Line Item No. XX

(Page X of X) R-4 Schedule Profile

5-21

Exhibit R-4a, Schedule Detail

Date:

Appropriation/Budget

Activity

Program Element Number and Name Project Number and Name

Schedule Profile FY PY FY CY

FY BY1 FY BY2 FYBY2+1 FYBY2+2 FY BY2+3 FYBY 2+4 FY BY2+5

Contract Preparation

System

Development

1-2Q

Quality Design and

Build

3-4Q 1-4Q 1-4Q

Developmental

Technical Testing

1-4Q

Developmental

Evaluation

3-4Q

Etc.

R-1 Line Item No. XX

(Page X of X)

R-4a Schedule Profile

5-22

Instructions -

Exhibit R-4, RDT&E Schedule Profile

Exhibit R-4a, RDT&E Schedule Detail

General: The R-4 and R-4a exhibits are required only for all programs or projects with funding greater than

$1 million in budget year 1 or budget year 2 for programs funded in budget activities 4, 5, and 7 only. Separate R-

4 and R-4a exhibits shall be prepared for each project in an applicable R-1 line item. These exhibits shall be printed

on 8 1/2 by 11 inch paper in landscape format. If a program element is not divided into projects, then the program

element itself is defined as a project for purposes of submitting R-4 and R-4a exhibits, and the exhibits and

instructions apply to the entire program element. Classified material shall be submitted separately so that the

RDT&E backup book can be submitted in an unclassified version.

Date: Identify the month and year of submission of the exhibit. If an Amended Budget is submitted, identify the

date of the revised submission.

Appropriation/Budget Activity. Identify the appropriation and budget activity. The budget activity must match the

RDT&E service annex and data base lock position.

R-1 Item Nomenclature: Identify the name of the R-1 line item.

Program Element Number and Name: Identify the number and nomenclature of the program element.

Project Number and Nomenclature: Identify the project number and nomenclature on each page.

For the R-4, Schedule Profile, provide a schematic display of major program milestones that reflect engineering

milestones, acquisition approvals, test and evaluation events, and other key milestones for the program events.

Cover the program years not just the budget year. The example provided is a sample only. Stub entries should be

tailed to the events and activities of the reported program. Congressional ‘staffer day’ briefing formats are

acceptable. Software for this display should be embedded for web site formatting. Due to software development

issues, the R-4 is strongly encouraged but will not be required for the FY 2004 program and budget review

submission. It will be required for justifying the FY 2005 budget.

For the R-4a, Schedule Detail, provide a tabular display of the major program milestones identified on the R-4 as

well as any additional programmatic events that contribute to and support the schedule profile identified on the R-4.

5-23

Termination Liability Funding

For Major Defense Acquisition Programs,

RDT&E Funding

($000)

Program FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Instructions:

1. For all ACAT I programs with RDT&E funding, indicate the funds, by year, budgeted for termination liability

2. If not budgeted, provide the appropriate waiver authority.

3. For programs with waiver authority, identify the amounts on the contract, by year.

Exhibit R-5 Termination Liability in Major Acquisition Program RDT&E Contracts

5-24

Instructions -

Exhibit R-5: Termination Liability in Major Acquisition Program RDT&E Contracts

General: Components will report the funds budgeted for termination liability within ACAT I RDT&E programs. As

applicable, identify the funded levels specified in the contract by year. If termination liability funding is not

budgeted, provide a copy of the appropriate waiver authority.

5-25