Acquisition Management
Acquisition Management tests the acquisition life cycle, how programs are categorized and approved, how contract type allocates risk, and how earned value shows whether cost and schedule are on track.
Life cycle and decision points
The Materiel Development Decision opens analysis of alternatives; Milestone A enters Technology Maturation and Risk Reduction; Milestone B enters Engineering and Manufacturing Development; Milestone C enters Production and Deployment; then Operations and Support. Requirements come through JCIDS; the Milestone Decision Authority approves entry at each point, advised by the Defense Acquisition Board for the largest programs. Programs are grouped as ACAT I (major defense acquisition programs), ACAT II, and ACAT III by dollar thresholds, which are adjusted periodically for inflation. Middle Tier of Acquisition paths using rapid prototyping or rapid fielding exist for urgent needs.
Contract type and risk
Firm-fixed-price places cost risk on the contractor and suits stable, well-defined requirements; fixed-price with economic price adjustment covers inflation; cost-plus-fixed-fee places cost risk on the government and suits development under high uncertainty; time-and-materials carries a ceiling and shifts risk to the government.
Money
RDT&E is two-year money for effort before a production decision; Procurement is three-year money for end items; O&M is annual money for sustainment. Misaligning the effort with the appropriation is a common exam error.
Worked example
A program reports PV of $2.0M, EV of $1.8M, and AC of $2.1M at the same date. Cost variance = EV − AC = −$300K (over budget); schedule variance = EV − PV = −$200K (behind plan); CPI = 1.8/2.1 = 0.86; SPI = 0.90. At that efficiency a budget at completion of $10M would need roughly $10M/0.86 = $11.6M, so cost performance must be addressed now.
Traps
Comparing EV to AC to judge schedule; using Procurement funds for development effort; assuming lowest-price-technically-acceptable suits complex development; and ignoring that ACAT thresholds are periodically adjusted.