The DoDI 5000.73, issued on October 24, 2024, provides updated guidance for cost analysis and estimation within the Department of Defense (DoD). This instruction replaces the March 2020 version and emphasizes the importance of sound, independent cost estimates for decision-making, budget planning, and resource allocation across the DoD. It applies to various DoD entities, including the Office of the Secretary of Defense (OSD), Military Departments, Combatant Commands, and Defense Agencies.

The document outlines responsibilities across key roles, particularly those of the Director of Cost Assessment and Program Evaluation (DCAPE) and the Deputy Director for Cost Assessment (DDCA). These roles are tasked with overseeing the implementation of the guidance, preparing independent cost estimates (ICEs), and approving software and cost data reporting plans. DoD Components are also required to develop and follow internal guidelines to align with this issuance, ensuring comprehensive coverage for military construction (MILCON) and acquisition programs.

A central focus of DoDI 5000.73 is establishing robust cost estimation procedures to support acquisition activities. Major acquisition categories addressed include Major Capability Acquisition (MCA), Middle Tier of Acquisition (MTA), and software acquisition. The instruction mandates independent cost assessments at key milestones, such as Milestone A and B, ensuring that cost estimates are not only realistic but are also revisited throughout the acquisition lifecycle to maintain alignment with evolving program needs.

For effective implementation, the guidance details various cost analysis activities for each acquisition framework. In MCA programs, for example, the issuance requires the preparation of ICEs at multiple stages, including early production phases, sustainment reviews, and in response to unit cost growth breaches. It also introduces stringent timelines to ensure that responsible entities have adequate time to perform their tasks, collect necessary data, and validate cost estimates before key decision points.

Cost estimation is not limited to acquisition programs but also extends to defense business systems and contracted services. This instruction allows for the flexibility of delegating estimates to DoD Components when appropriate, although oversight from the Office of Cost Assessment and Program Evaluation (CAPE) remains a requirement for programs exceeding certain thresholds. CAPE's role in reviewing all cost estimates helps maintain consistency and reliability across the department’s budgeting process.

The document addresses various factors influencing cost, including risk, inflation, and escalation, emphasizing the need for historical data analysis to forecast program costs accurately. It also requires regular sustainment reviews and the submission of lifecycle cost estimates to ensure that long-term affordability goals are met. Programs are expected to upload relevant documentation to the Cost Assessment Data Enterprise (CADE), facilitating transparency and enabling CAPE to generate annual reports for Congress on the DoD’s cost estimation activities.

One significant policy shift in this guidance is its prohibition of using cost estimates developed for budget planning in contract negotiations, ensuring that such estimates remain tools for strategic planning rather than negotiation leverage. This policy supports the DoD's goal of maintaining clear distinctions between internal financial planning and contractual commitments with external parties.

Another critical component of DoDI 5000.73 is its inclusion of timelines and procedures for different types of cost analysis activities, such as the multiyear procurement (MYP) cost analysis and sustainment reviews. These timelines ensure that every stage of cost estimation is adequately planned and executed, with each program receiving appropriate oversight and review. For example, MYP certifications require an independent analysis confirming the significant cost savings of multiyear contracts before submission to Congress for legislative approval.

The implications of DoDI 5000.73 are far-reaching. It strengthens the accountability of cost estimation processes, aligns program management with long-term affordability goals, and fosters collaboration among different DoD entities. By mandating rigorous data collection and analysis, the instruction aims to reduce cost overruns and improve the predictability of defense programs. It also enhances transparency by ensuring that cost estimation methodologies and results are accessible to decision-makers and oversight bodies, thus reinforcing trust in the DoD’s financial management practices.

This summary provides an overview of the key elements of DoDI 5000.73. However, the content should not be used as a substitute for the official guidance, nor should it be considered as legal advice or a definitive interpretation of the instruction.