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Got a Defense Business System? The effect of the new defense business system policy on cost estimating, tools, and funding




The Department of Defense (DoD) budgets over $7 billion a year for business system investments and has mandated that all information technology systems must be assessed and certified through a formal process before funding can be obligated in FY 2013. This new law, Section 901 of the Fiscal Year 2012 National Defense Authorization Act (FY2012 NDAA), significantly expands the scope of systems requiring certification to include any business system with a total cost in excess of $1M over the period of the current future-years defense program, regardless of type of funding or whether any development or modernization is planned. As a result, virtually all of the $7.4 billion in estimated FY 2013 business system information technology (IT) funding are subject to be assessed and certified under this new law. This paper aims to provide readers with a general understanding of the law and its effects on current and future business applications. First, we examine the latest DoD investment management process established for implementation of the Section 901 requirements. Second, we examine how the Marine Corps’ implementation of this statutory requirement impacts cost estimates, budgets and cost estimating tools which themselves could be considered as defense business systems. Finally, we provide a case study on a real world business application which includes navigating a program through the certification process and identifying the cost estimating impact and funding implications associated with the new law.


Charles Gu
Booz Allen Hamilton
Mr. Gu has over 16 years of experience in providing economic, acquisition, and cost analysis support including the analysis of program requirements, alternatives, and constraints. In addition, Mr. Gu has a detailed understanding of cost accounting, capital budgeting, business process reengineering, project management, earned value analysis, risk analysis and statistical/quantitative modeling. He was the recipient of the USMC Commander’s Honorary Team Award for Excellence in Operations Research/Systems Analysis in 2006, 2009 and 2012. Mr. Gu joined Booz Allen Hamilton’s Business Analytics team in 2005 and is a Lead Associate in the United States Marine Corps market. Mr. Gu is currently serving as technical manager for the USMC Logistics Requirements Funding Summary Cost Estimating Tool project and is responsible for the management of life cycle support of the Tool. Mr. Gu’s recent projects include cost analysis efforts for the Joint Counter Radio Controlled Improvised Explosive Device (RCIED) Electronic [JCREW] Program, Joint Light Tactical Vehicle (JLTV) Program Office Estimate, Joint Mine Resistance and Ambush Protected Systems (MRAPS) and M1A1 Service Life Extension Program Trade Study. As cost lead, Mr. Gu is responsible for providing cost analysis guidance, development of the approach, incorporating best practices and recommending the best solution for the DoD acquisitions programs.
Prior to Booz Allen Hamilton, Mr. Gu worked at Science Applications International Corp. (SAIC) from 1998 to 2005. Mr. Gu conducted numerous studies and cost analyses for both private and public sectors. Prior to his work at SAIC, Mr. Gu worked at VSE Corp from 1995 to 1998. As cost analyst, Mr. Gu provided project control and financial analysis in support of the Field Artillery Ammunition Support Vehicle System Technical Support Contract. Mr. Gu received a B.S. degree (1995) in Finance from the George Mason University and an MBA degree (2003) in Emerging Technology from the George Washington University.