Financial Management Regulation Volume 2B, Chapter 5

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VOLUME 2B, CHAPTER 5: “RESEARCH, DEVELOPMENT, TEST, AND

EVALUATION APPROPRIATIONS”

SUMMARY OF MAJOR CHANGES

Changes are identified in this table and also denoted by blue font.

Substantive revisions are denoted by an * symbol preceding the section, paragraph,

table, or figure that includes the revision.

Unless otherwise noted, chapters referenced are contained in this volume.

Hyperlinks are denoted by bold, italic, blue and underlined font.

The previous version dated November 2017 is archived.

PARAGRAPH

EXPLANATION OF CHANGE/REVISION

PURPOSE

All

Updated hyperlinks and ensured compliance with

administrative instructions.

Revision

1.2

Added Authoritative Guidance section in compliance with

administrative instructions

Addition

1.5.8

Incorporated definition of BA 08 and cancelled the

OUSD(C) “Software & Digital Technology Pilot Programs

Interim Financial Management Regulation Policy” dated

June 4, 2020.

Addition

Exhibit R-3

Updated required Test & Evaluation cost categories and

updated instructions

Revision

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Table of Contents

VOLUME 2B, CHAPTER 5: “RESEARCH, DEVELOPMENT, TEST, AND EVALUATION

APPROPRIATIONS” ..................................................................................................................... 1

1.0 GENERAL......................................................................................................................... 3

1.1 Purpose ........................................................................................................................... 3

*1.2 Authoritative Guidance ............................................................................................... 3

1.3 Submission Requirements .............................................................................................. 3

1.4 Classification .................................................................................................................. 3

1.5 RDT&E Budget Activities ............................................................................................. 4

1.6 Establishing RDT&E Program Elements ....................................................................... 6

2.0 RDT&E EXHIBIT REQUIREMENTS ............................................................................. 7

2.1 Purpose ........................................................................................................................... 7

2.2 Submission Requirements .............................................................................................. 7

3.0 CONGRESSIONAL JUSTIFIATION/PRESENTATION................................................ 9

4.0 RDT&E APPROPRIATION BUDGET EXHIBIT FORMATS ....................................... 9

4.1 Standardized budget exhibit formats .............................................................................. 9

4.2 RDT&E exhibit formats ............................................................................................... 10

Exhibit R-1: RDT&E Programs ............................................................................................... 11

Exhibit R-2: RDT&E Budget Item Justification ...................................................................... 13

Exhibit R-2a: RDT&E Budget Item Justification (Project)...................................................... 14

*Exhibit R-3: RDT&E Project Cost Analysis .......................................................................... 19

Exhibit R-4: RDT&E Schedule Profile .................................................................................... 24

Exhibit R-4a: RDT&E Schedule Detail .................................................................................... 25

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CHAPTER 5

RESEARCH, DEVELOPMENT, TEST, AND EVALUATION APPROPRIATIONS

1.0 GENERAL

1.1 Purpose

This chapter provides instructions applicable to budget formulation and congressional

justification for Research, Development, Test, and Evaluation (RDT&E) appropriations. Unless

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

*1.2 Authoritative Guidance

1.2.1. The instructions and related requirements prescribed in this chapter are derived

primarily from, and in accordance with Title 10, United States Code, section 113 (10 U.S.C. §113).

1.2.2. The Office of Management and Budget (OMB) Circular A-11 is the governing

document for preparation, submission and execution of the budget.

1.2.3. Volume 2A, Chapter 1, Section 2.13 provides policies and definitions concerning

costs that are to be financed in RDT&E appropriations.

1.3 Submission Requirements

1.3.1. General guidance on submission requirements is in Volume 2A, Chapter 1. This

chapter provides guidance for the preparation of RDT&E appropriation backup material required

to support the Budget Estimates Submission (BES) and the President’s budget request. Other

chapters in the Financial Management Regulation require additional exhibits. The Components

will also submit any exhibits required by the Office of Management and Budget (OMB)

Circular A-11, Preparation and Submission of Budget Estimates.

1.3.2. Military Departments and Defense Agencies will be responsible for clearing the

justification material with the Washington Headquarters Services, Directorate for Office of

Security Review, prior to transmittal to the OMB, the Office of the Secretary of Defense (OSD),

and the congressional committees.

1.4 Classification

The budget justification material should be unclassified. All classified material must be

submitted separately. Components must include a R-2 RDT&E Budget Justification exhibit for

special access programs (SAPs) that are not labeled as secret. The R-2 exhibits for SAPs must

only include funding streams and cite the following justification: “This program is reported in

accordance with Title 10, United States Code, Section 119(a)(1) in the Special Access Program

Annual Report to Congress.” All other (non-intel and non-SAP) classified funding requests must

be identified (i.e., submit a one page R-2 exhibit) within unclassified justification budget materials.

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1.5 RDT&E Budget Activities

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

efforts. The definitions are provided in section 1.5.1 through 1.5.8 below. The acquisition

milestones identified in the definitions are established by Department of Defense Instruction

5000.02, “Operation of the Defense Acquisition System.” Acquisition program developmental

criteria and administrative requirements for each milestone are set forth in this instruction.

1.5.1. 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.

1.5.2. 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.

1.5.3. 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. Budget Activity 3 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

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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. (For

further discussion on Technology Readiness Levels, see the Assistant Secretary of Defense for

Research and Engineering’s Technology Readiness Assessment (TRA) Guidance.) 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.

1.5.4. 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 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.

1.5.5. Budget Activity 5, System Development and Demonstration (SDD). System

Development and Demonstration (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, demonstration to support

Milestone C decisions, conducting live fire test and evaluation, and initial operational test and

evaluation 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.

1.5.6. Budget Activity 6, RDT&E Management Support. This budget activity includes

management support for 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 ATD program areas, as appropriate. Military construction costs

directly related to major development programs are included in this budget activity.

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1.5.7. 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 approval for Low Rate Initial Production (LRIP). 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.

* 1.5.8. Budget Activity 8, Software and Digital Technology Pilot Programs.

1.5.8.1. Software and Digital Technology Pilot Program requirements for funding

in BA 8 includes software, electronic tools, systems, applications, resources, acquisition of

services, business process re-engineering activities, functional requirements development,

technical evaluations, and other activities in direct support of acquiring, developing, deploying,

sustaining, enhancing, and modernizing Software Digital Technology Pilot Programs.

1.5.8.2. Pilot programs may purchase Commercial off the Shelf (COTS) software,

tools, and services necessary to meet the program’s requirements.

1.5.8.3. Software and Digital Technology Pilot Programs may be nominated to

Under Secretary of Defense (Acquisition & Sustainment). Approved pilot program nominations

will be submitted with the President’s Budget request.

1.5.8.4. A system project participating in the Pilot Program may be removed from

BA 8 if the project has not been successful in meeting criteria established for the Pilot Program by

the Secretary of Defense.

1.6 Establishing RDT&E Program Elements

1.6.1. The program element is the primary data element in the 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 must be identified in a unique program element. Requests

to establish program elements should be forwarded to Office of the Secretary of Defense (OSD)

Cost Assessment and Program Evaluation (CAPE) for coordination and approval.

1.6.2. 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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2.0 RDT&E EXHIBIT REQUIREMENTS

2.1 Purpose

This section prescribes instructions for the preparation and submission of RDT&E

appropriations budget material to support the BES and the President’s budget request. See

Volume 2A, Chapter 1, Section 4.0, for specific printing requirements.

SUMMARY OF EXHIBIT REQUIREMENTS

Exhibit

Reference

Exhibit

Appropriation

R-1

RDT&E Programs

All

R-2

RDT&E Budget Item Justification

All

R-2a

RDT&E Project Justification

All

R-3

Cost Analysis

All

R-4

RDT&E Program Schedule Profile

All

R-4a

RDT&E Program Schedule Detail

All

2.2 Submission Requirements

2.2.1. Extensible Markup Language (XML) Exhibits. All Components must submit

required budget exhibits as PDFs with the source XML file embedded. These PDFs will be

generated by one of the following two processes:

2.2.1.1. Submit an XML file to the XML Tools section of the Comptroller XML

Exhibits web site, https://exhibits.dtic.mil/r2/app (for Components capable of building an XML

file from an internal system). The XML files submitted through the XML Tools section must be

compliant with the latest RDT&E XML schema, located within the same section of the website;

2.2.1.2. Create a RDT&E exhibit manually within the “Create New R-2” section

of the Comptroller XML Exhibits web site, https://exhibits.dtic.mil/r2.

2.2.1.3. The result of either process will be a PDF file with an XML file embedded.

All RDT&E exhibit PDFs/XMLs must be assembled into a Justification Book(s) within the same

website using one of the Justification Book tools and posted to the SIPRNET website

https://cisweb.ousdc.osd.smil.mil/.

2.2.1.4. Formats and examples of the exhibits are contained in Section 3.0.

2.2.2. Each backup book will include an Exhibit R-1, RDT&E Program, two indices of

program elements (including R-1 line number, program element title, program element number,

and backup book page number), one alphabetically by program element title and on by budget

activity and R-1 line number, and specific exhibits for those items covered by the backup book.

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2.2.3. The exhibits will be aggregated in the following order for each R-1 line item, as

applicable to that line item and submitted in R-1 line item order.

Arrangement of Exhibits – General

R-1 RDT&E Programs

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

Note: The R-3/R-4/R-4a supporting each R-2a Project Justification will be arranged immediately

following the R-2a.

2.2.4. Major Defense Acquisition Programs (MDAPs)/Major Automated Information

Systems (MAIS)

2.2.4.1. Joint budget guidance from the Under Secretaries of Defense for

Acquisition, Technology & Logistics (AT&L) and Comptroller directs that all MDAPs or MAIS

will be budgeted in separate, dedicated Program Elements (R-1 line items), and associate all of the

funding for a given MDAP/MAIS with a PRCP Program Number (PNO).

2.2.4.2. For all MDAP/MAIS programs, the R-2 RDT&E Budget Item Justification

exhibit must include the PNO. Components must also ensure that all applicable fiscal years of the

PRCP and FYDP annex data bases are updated to reflect the program budget estimates for all

MDAP/MAIS programs, including all prior years and cost-to-complete columns. Each

MDAP/MAIS subprogram is a component that will be identified by appropriation, budget line

item, and budget activity under the End Item R-1 Line Item header.

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

2.2.6. Facilities Exhibit. For improvements to and construction of government-owned

facilities funded in the RDT&E appropriation, a DD Form 1391, Military Construction Project

Data, must be provided separately for each Budget Year (BY) project and any Prior Year (PY) or

Current Year (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 Office of the Under Secretary of Defense (Comptroller)

(OUSD(C)) Program/Budget (P/B) Investment Directorate and to the Military Personnel and

Construction Directorate. A copy of the form and the instructions are in Chapter 6.

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3.0 CONGRESSIONAL JUSTIFIATION/PRESENTATION

This Section presents the backup book organization and the exhibit requirements for

submission to Congress. See Volume 2A, Chapter 1, Section 4.0 for specific printing

requirements. Justification material will be organized into a Committee Staff Procurement

Backup Book. Volume 2A, Chapter 1, Section 4.3 provides a detailed distribution schedule for

the procurement backup books. A separate congressional committee backup book will be prepared

for the President’s budget request for each RDT&E appropriation.

Cover

Department of Defense

FY 20BY President’s Budget Submission

Justification Book Volume X of X

Appropriation Title

Section 1 - Summary Material

Table of Contents

R-1 listing (R-1 Exhibits will be prepared using the OUSD(C) automated system with input

from the Services and Defense Agencies)

Section 2 - Budget Appendix Extract Appropriation Language

Section 3 - R-1 Line Item Detail. RDT&E budget exhibits will be organized as discussed

in paragraph 2.2.3.

4.0 RDT&E APPROPRIATION BUDGET EXHIBIT FORMATS

4.1 Standardized budget exhibit formats

Section 2.2 describes the use of XML budget exhibits for RDT&E appropriations. In

addition to the key attribute of making budget exhibit data electronically searchable, the XML

exhibits standardize the various budget displays, enabling more effective and efficient budget

formulation, review, analysis, and submission.

4.1.1. The exhibit formats provided on the following pages reflect guidance presented in

previous sections.

4.1.2. The use of XML exhibits is mandatory for BES and President’s budget request

backup justification material.

4.1.3. XML exhibits will automatically standardize formatting, to include:

4.1.3.1. Exhibits displayed on 8 1/2 inch by 11 inch paper in landscape format.

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4.1.3.2. Actual fiscal years (e.g., FY 2016, FY 2017, etc.) rather than the template

entries (i.e., Prior Years (PYs), Prior Year (PY), Current Year (CY), Budget Year (BY), BY+1,

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

4.1.3.3. Annotating the applicable R-1 line item number and page number within

the line item (e.g., Item 1-1 of 5, 2-1 of 1, 3-1 of 20, etc.) at the bottom center of each exhibit page.

4.1.3.4. Properly paginate the backup book.

4.2 RDT&E exhibit formats

There are six RDT&E exhibits that support the formulation and submission of the BES and

the President’s budget request. The exhibits provide data and information that justifies budgetary

requirements for the various RDT&E appropriations. The exhibit formats follow.

Volume 2B, Chapter 19, Other Special Analyses, also identifies budget exhibits that may be

required.

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Exhibit R-1: RDT&E Programs

Appropriation: ________________________

Date: ______________________

R- 1 Line

Item N o

Program

Element

N umber

Item

Budget

Activity

Prior

Year

Cost

Current

Year

Cost

Budget

Year

Cost

Budget

Year

OCO

Cost

Total

Budget

Year

Cost

Exhibit R-1, RDT&E Programs

TO A, $ in Millions

Exhibit R-1, RDT&E Programs

Department of the _________________

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Exhibit R-1: RDT&E Programs (Continued)

Exhibit R-1: RDT&E Programs

A. General Instructions:

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.

B. RDT&E Line Item Content:

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. 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 Prior Year (PY), the Current Year (CY), and Budget Year (BY).

4. Subtotals by Budget Activity and total funding for the appropriation for the Prior Year

(PY), the Current Year (CY), and Budget Year (BY).

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Exhibit R-2: RDT&E Budget Item Justification

COST ($ in Millions)

FY PY FY CY

FY BY

Base

FY BY

OCO

FY BY

Total FY BY+1 FY BY+2 FY BY+3 FY BY+4

Cost to

Complete

Total Cost

Total Program Element

Project Number: Project Title

Project Number: Project Title N

Note

FY PY FY CY

Base

FY BY

OCO

FY BY

Total

FY BY

Current President's Budget

Total Adjustments

Congressional Rescissions

Congressional Adds (appropriated)

Reprogrammings

SBIR/STTR Transfer

Congressional Add Details ($ in Millions, and includes General Reductions)

Project Number, Project Title 1

Congressional Add Title:

Subtotal for Project 1

Project Number, Project Title N

Congressional Add Title:

Subtotal for Project N

Total for all Projects

R-2 Schema 3.4 Template as of 5-19-2010

Other Adjustment Title N

R-1 ITEM NOMENCLATURE

Appropriation Code: Appropriation Name

BA Number: Budget Activity Title

Identify when a Program Element or a Project: 1) is a new start, 2) was terminated/completed, 3) was previously funded, or will be funded, in a different Program Element, or 4) has had a Title change.

For Program Element or Project transfers, include the current and previous Program Element number and title, and Project number and title, if applicable.

B. Program Change Summary ($ in Millions)

A. Mission Description and Budget Item Justification

Change Summary Explanation

DATE:

Month/Year

Exhibit R-2, RDT&E Budget Item Justification: BES/PB 20xx Service/Agency

FY PY

Congressional General Reductions

Other Adjustment Title 1

Congressional Directed Transfers

Congressional Directed Reductions

FY CY

Program Element Number: Program Element Title

APPROPRIATION/BUDGET ACTIVITY

Previous President's Budget

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

The R-2A shall include a detailed description and justification of the efforts included in the specific project.Every Project shall include an R-2A exhibit; including where a Project is an aggregate of Congressional Adds.

An exception may be to create an R-2 without an R-2A for Single Project PEs.

For ACAT 1D programs, identify Cost to Complete and Total Cost for the program and all projects; otherwise, the appropriate value shall be "Continuing".

An R-3 Exhibit must be provided for Budget Activity 4, 5, and 7 Programs.

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

Prior

Years

Title: Accomplishments/Planned Program Title 2

FY CY Justification:

Y BY Base Justification:

FY CY to FY BY Increase/Decrease Statement:

FY BY OCO Plans:

Title: Accomplishments/Planned Program Title 1

FY CY Justification:

Y BY Base Justification:

FY CY to FY BY Increase/Decrease Statement:

FY BY OCO Plans:

B. Accomplishments/Planned Programs ($ in Millions, Article Quantities in Each)

FY P Y

FY CY

FY B Y

Base

FY B Y

OCO

FY B Y

Total

MDAP/MAIS Code: (if allplicable)

A. 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. Provide a description and justification. Identify the military requirement(s) that

this Project will meet.

dentify New Start efforts for the Budget Year (BY). New Start details shall be displayed on the R-2a rather than the R-2.

Project Number: Title

Quantity of RDT&E Articles

FY 2017

FY 2018

FY 2019

FY 2020

Cos t To

Compl e te

Total Cos t

Exhibit R-2, RDT&E Budget Item Justification: BES/P

B 20XX Service/Agency

Date: Month Year

Appropriation/Budget Activity

Appropriation Code/BA Number

COST ($ in Millions)

FY 2014

FY 2015

FY 2016

Base

FY 2016

OCO

FY 2016

Total

R-1 Program Element (Number/Name)

Program Element Number/Title

Project (Number/Name)

Project Number/Title

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

Contract

Me th od

Award

Date

Cost

Remarks

Discuss Acquisition Strategy and items of interest. Acquisition Strategy is NOT required for BA 1, 2, 3, or 6.

Subtotal

Target

Value of

Cost

Award

Date

Award

Date

Cost

C o s t To

Compl e te

To t a l

Cost

Cost Category Item

Performing

Activity & Location

Prior

Years

Cost

Award

Date

Product Development ($ in Millions)

FY P Y

FY C Y

FY BY

Base

FY B Y

OCO

FY B Y

Total

C. Other Program Funding Summary ($ in Millions)

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

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

Exhibit R-2: RDT&E Budget Item Justification

A. General Instructions:

1. An Exhibit R-2 must be prepared for each program element. An Exhibit R-2a must be

prepared for each RDT&E project, even if there is only one project and even if a project is funded

only in a Prior Year (PY) and/or a Current Year (CY), regardless of funding amount. To provide

full-funding visibility, every program, project, and activity specifically added by Congress to the

President’s Budget Request (a.k.a. Congressional Adds) must be identified within an Exhibit R-2a.

The programs, projects, and activities may be treated as individual projects, grouped, but

separately identified, in one or more “Congressional Adds” projects, and/or included within “core”

projects. Classified material will be submitted separately.

2. All funding within any R-exhibit will be expressed in millions, with three decimal

places, unless specifically noted otherwise.

3. Care should be taken to see that exhibits are clear and concise. Abbreviations must be

identified on the page on which they occur.

B. Exhibit Instructions:

1. Date. Include the month and year of submission of the exhibit. If an Amended Budget

is submitted, identify the date of the revised submission.

2. Exhibit R-2 RDT&E Budget Item Justification. Identify the Budget Cycle/Budget

Year/Service Agency Name. Identify BES (Budget Estimates Submission) or PB (President’s

Budget) for Budget Cycle, the Budget Year, and the Service Agency Name. Information must

match the Program Resources Collection Process (PRCP) (R-1) data base lock position.

3. Appropriation/Budget Activity. Identify Appropriation Code (Treasury Account

Symbol) and Name/Budget Activity Number and Title. Identify the appropriation and budget

activity. Information must match the RDT&E PRCP (R-1) data base lock position.

4. R-1 Item Nomenclature/Title (Program Element Name). Identify the name of the R-1

line item. Information must match the RDT&E PRCP (R-1) data base lock position.

5. Program Element Number. Identify the program element. Information must match the

RDT&E PRCP (R-1) data base lock position.

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

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-17

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

7. Resource Summary. The Exhibit R-2 must 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 total funding for the

program element matches the RDT&E PRCP (R-1) data base lock position by budget line item

and that total costs for Acquisition Category 1 (ACAT) programs are consistent with Selected

Acquisition Reports.

8. For ACAT 1 programs, identify Cost-to-Complete and Total Cost for the program and

all projects; otherwise, the appropriate value must be “Continuing”. The XML process will

automatically insert “Continuing” if no data is submitted.

9. RDT&E Articles (R-2a only). Identify the test articles (engineering development

models, test articles, low rate initial production test article, government furnished equipment

articles) that are being procured and why. Test Articles can be identified for a project and/or for

activities identified in Accomplishments/Planned Programs.

10. Program Element and Project Notes. Identify when a program element or project

is: (1) a new start, (2) was terminated/completed, (3) was previously funded, or (4) will be funded

in a different program element, or Title changes.

11. For program element or project transfers, include the current and previous program

element number and names, and projected number and name if applicable.

12. Mission Description and Budget Item Justification. The R-2 will include a description

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

description and justification of the efforts included in the specific project.

13. 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 must

include a concise narrative summary explaining the changes in the total program element for the

PY, CY, and BY. Further adjustments will be broken out into the following categories:

Congressional General Reductions

Congressional Directed Reductions

Congressional Rescissions

Congressional Adds

Congressional Directed Transfers

Reprogrammings

SBIR/STTR* Transfers

Total Other Adjustments – (unique titles may be added to describe the change)

Small Business Innovation Research (SBIR)/Small Business Technology Transfer

(STTR)

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-18

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

14. Congressional Add Details (Exhibit R-2). Each “Congressional Add” will be

identified separately by project and may be included as: (1) an individual project, (2) as groups in

one or more “Congressional Add” projects, and/or (3) within “core” projects. The title (provided

by Congress) and the funding for PY and CY will be listed in a bullet format. Congressional Adds

should include only the funding provided by Congress.

15. Change Summary Explanation. Provide a separate, concise narrative summary

explaining the changes in the total program element in the Prior Year, the Current Year, and the

Budget Year, as applicable.

* 16. Accomplishments/Planned Programs (Exhibit R-2a). Provide a concise narrative

summary and associated funding for each project for CY, and BY in a bullet format. The PY

narrative summary is deleted. The total funding reflected should match the total project funding.

Briefly discuss why project funding changed from the CY to the BY in the Increase/Decrease

Statement. The explanation must be sufficient to justify the BY request but should not be a

restatement of Planned Program in the BY. (For example: “Funding increases $30 million due to

procurement of 2 System Development Test Articles (STDA).”) MINOR changes in funding from

CY to BY need not be addressed. Each Software and Digital Technology Pilot Program will

specifically identify Operation & Maintenance (O&M) efforts and Procurement efforts as separate

entries.

17. Other Program Funding Summary (Exhibit R-2a). 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 must 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 must be included.

18. Acquisition Strategy (Exhibit R-2a). An explanation of acquisition, management, and

contracting strategies must be provided for each project in the Remarks section. This section is

not required for the program element budget line items in Budget Activities 1 (Basic

Research), 2 (Applied Research), 3 (Advanced Technology Development) and 6 (RDT&E

Management Support).

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-19

*Exhibit R-3: RDT&E Project Cost Analysis

Exhibit R-3, RDT&E Project Cost Analysis: BES & PB 20XX Service/Agency DATE: Month/Year

APPROPRIATION / BUDGET ACTIVITY R-1 ITEM NOMENCLATURE PROJECT NAME AND NUMBER

Appropriation Code / BA Number Program Element Number: Program Element Name Proejct Number: Project Title

FY BY

Total

Contract Method &

Type

Performaing

Activity & Location

Total Prio r

Year Costs

Cos t

Award

Date

Cos t

Award

Date

Cos t

Award

Date

Total Cost

Cost To

Complete

Total Cost

Target Value of

Contract

Cost Category Item 1 See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Cost Category Item N See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Subtotal:

FY BY

Total

Contract Method &

Type

Performaing

Activity & Location

Total Prio r

Year Costs

Cos t

Award

Date

Cos t

Award

Date

Cos t

Award

Date

Total Cost

Cost To

Complete

Total Cost

Target Value of

Contract

Cost Category Item 1 See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Cost Category Item N See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Subtotal:

FY BY

Total

Contract Method &

Type

Performaing

Activity & Location

Total Prio r

Year Costs

Cos t

Award

Date

Cos t

Award

Date

Cos t

Award

Date

Total Cost

Cost To

Complete

Total Cost

Target Value of

Contract

Cost Category Item 1 See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Cost Category Item N See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Subtotal:

FY BY

Total

Contract Method &

Type

Performaing

Activity & Location

Total Prio r

Year Costs

Cos t

Award

Date

Cos t

Award

Date

Cos t

Award

Date

Total Cost

Cost To

Complete

Total Cost

Target Value of

Contract

Cost Category Item 1 See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Cost Category Item N See Notes Below Activity/Location Mon/Year Mon/Year Mon/Year

Subtotal:

CY Co s t Cos t Total Cost Cos t Total Cost

Cost To

Complete

Total Cost

The Project Total Cost shall be equal to the Project Cost on the R-2A.

Contract Method may be any one of C, SS, TBD, or Various.

Contract Type may be any one of CPAF, DPFF, DPIF, FFP, FPI, TBD, or Various.

Funding Vehicle may be any one of Allot, BPA, FFRDC, MIPR, PO, Reqn, RO, TM, of Various.

Remarks: Required Cost Categories are: Developmental Test & Evaluation (DT&E), Operational Test & Evaluation (OT&E), and Live Fire Test & Evaluation (LFT&E).

Remarks: Typical Cost Categories are: Contractor Engineering Support, Government Engineering Support, Program Management Support, Program Management Personnel, Travel, Labor (Research Personnel), and Overhead.

Project Total Cost:

Remarks:

An R-3 Exhibit shall be provided for Budget Activity Number 4, 5, and 7 PE's.

Tes t & Evalu ation ($ in Millions )

FY CY

FY BY

Bas e

FY BY

OCO

Management ($ in Millions)

FY CY

FY BY

Bas e

FY BY

OCO

Support ($ in Millions)

FY CY

FY BY

Bas e

FY BY

OCO

Remarks: Typical Cost Categories are: Development Support, Software Support, Training Development, Integrated Logistics Support, Configuration Management, Technical Data, and GFE.

FY CY

FY BY

Bas e

FY BY

OCO

Remarks: Typical Cost Categories are: Primary Hardware Development, Ancillary Hardware Development, Systems Engineering Licenses, Tooling, GFE, and Award Fees.

Product Development ($ in Millions)

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-20

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

Exhibit R-3: RDT&E Project Cost Analysis

A. General Instructions:

1. The R-3 exhibit is required for programs funded in budget activities 4 (Advanced

Component Development and Prototypes), 5 (System Development and Demonstration),

and 7 (Operational System Development) only. A separate R-3 exhibit must be prepared for each

project in an applicable R-1 line item.

2. These exhibits must be printed on 8 1/2 by 11 inch paper in landscape format. Classified

material must be submitted separately.

3. All funding within any R-exhibit will be expressed in millions, with three decimal

places.

B. Exhibit Instructions:

1. Identify the month and year of submission of the exhibit. If an Amended Budget is

submitted, identify the date of the revised submission.

2. Appropriation Code (Treasury Account Symbol)/ and Name/Budget Activity Number

and Title. Identify the appropriation and budget activity. This information must match the PRCP

(R-1) lock position.

3. R-1 Item Nomenclature/Title (Program Element Name): Identify the name of the R-1

line item as identified in PRCP (R-1) lock position. This information must match the PRCP (R-1)

lock position.

4. Program Element Number: The Program Element must be unique. An R-2 Exhibit

with a Budget Activity Number that is different from the previous years should include PY and

CY information within the current R-2 Exhibit.

5. Project Number and Nomenclature: Identify the project number and nomenclature as

identified in PRCP (R-1) lock position.

6. Project Cost Categories. Cost information must be provided for each project regardless

of funding amount, with project costs broken down into cost categories. Total of all project costs

must equal the project funding for any funding years. Sample cost categories shown are typical of

various types of defense research and development efforts. Costs must be distributed among

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

used by the project office in project execution.

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-21

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

* a. For the T&E information category, the Project Cost Categories must be

Developmental Test & Evaluation (DT&E), Operational Test & Evaluation (OT&E), and Live Fire

Test & Evaluation (LFT&E).

* b. For the other information categories (Product Development, Support Costs, and

Management Services), the illustrated sample cost categories may be used if they correspond to

the project’s work breakdown structure. There is no requirement to use Project 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.

7. If the program office tracks efforts by major contract, then display the information

accordingly. The cost categories must be separated into 4 information categories as follows:

a. 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 must be reported individually.

b. 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 must be reported individually.

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

government efforts) 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 must be reported individually. For the T&E information category, the

Project Cost Categories must be Developmental Test & Evaluation (DT&E), Operational Test &

Evaluation (OT&E), and Live Fire Test & Evaluation (LFT&E).

d. 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 must be reported individually.

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-22

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

8. Government Furnished Property. Property, such as hardware, software, or information,

which the government is contractually obligated to furnish a contractor or government performing

activity must be identified. Provide a brief identification of the item to be provided, and the

contractor or government activity providing the item. Provide the 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.

9. Award Fees. Identify amounts budgeted for award fees and indicate contractor

performance and percentage of award fees actually awarded in past award fee periods.

10. Contract Method/Type or Funding Vehicle. The following codes must be used to

identify the contract method, contract type, and funding vehicle:

Contract Type

Contract Method

CPIF

Cost Plus Incentive

Sole Source

TBD

To Be Determined

VAR

Various

FFP

Firm Fixed Price

Fixed Price

FPI

Fixed Price Incentive

Competitive

CPAF

Cost Plus Award Fee

CPFF

Cost Plus Fixed Fee

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

BPA Blanket Purchase Agreement

FFDC Federally Funded Research and Development Center

VAR Various

11. 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.

12. Total Prior Year (PY) Cost. Provide actual amounts for the total of all years before

the Current Year (CY).

13. CY - BY. Provide actual or budget amounts for each year for the Current Year (CY)

and the Budget Year (BY).

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-23

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

14. 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.

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

16. Total Cost. Provide the cumulative total of all budgeted funds for the program

(including funds obligated/budgeted for PY, CY, BY 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.

17. 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.

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-24

Exhibit R-4: RDT&E Schedule Profile

DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-25

Exhibit R-4a: RDT&E Schedule Detail

DATE: Month/Year

APPROPRIATION/BUDGET ACTIVITY

R-1 ITEM NOMENCLATURE

PROJECT NUNBER AND Title

Appropriation Code/BA Number

Program Element Number: Program Element Title

Project Number: Project Title

Exhibit R-4A, RDT&E Project Cost Analysis: BES/PB 20xx Service/Agency

Schedule Details

Start

End

Event

Quarter

Year

Quarter

Year

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Event Title

YYYY

Within a Schedule Detail, the Start and End elements must be chronologically correct (value of Start <= value of End).

Within a Schedule Detail, the Start and End elements cannot refer to years before the PriorYear and after the last budget year (BudgetYear 5).

YYYY

Event Title

YYYY

Event Title

YYYY

DoD 70000.14-R Financial Management Regulation Volume 2B, Chapter 5

* September 2022

5-26

Exhibit R-4a: RDT&E Schedule Detail (Continued)

A. General Instructions:

1. The R-4 and R-4a exhibits are required for programs or projects funded in budget

activities 4 (Advanced Component Development and Prototypes), 5 (System Development and

Demonstration), and 7 (Operational System Development) only. Separate R-4 and R-4a exhibits

must be prepared for each project in an applicable R-1 line item.

2. These exhibits must 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 must be submitted separately.

B. Detail Instructions:

1. Date: Identify the month and year of submission of the exhibit. If an Amended Budget

is submitted, identify the date of the revised submission.

2. Appropriation Code (Treasury Account Symbol) and Name/Budget Activity Number

and Title. Identify the appropriation and budget activity. The budget activity title must match the

RDT&E annex and the Program Resources Collection Process (PRCP) (R-1) locked position.

3. R-1 Item Nomenclature: Identify the name of the R-1 line item as identified in PRCP

(R-1) locked position.

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

program element as identified in PRCP (R-1) locked position.

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

each page as identified in PRCP (R-1) locked position.

6. For the R-4, Schedule Profile, provide a schematic display (in image file format: tif,

jpeg, gif, bmp, or png) 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. Stub entries should be tailored to the events and activities

of the reported program. Congressional “staffer day” briefing schematics are desired to minimize

potential schedule display inconsistencies. However, the option to build the Schedule Profile using

XML software is still available.

7. 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.