Economic Analysis for Decision-making
|Publication Date:||9 September 2015|
PURPOSE. In accordance with the authority in DoD Directive (DoDD) 5105.84 (Reference (a)), this instruction:
a. Reissues DoD Instruction 7041.3 (Reference (b)) to establish policy, assign responsibilities, and provide procedures for conducting cost-effective economic analyses evaluating the costs and benefits of any government decisions to initiate, renew, or expand program or project alternatives under the Office of Management and Budget (OMB) Circular No. A-94 (Reference (c)).
b. Authorizes the Defense Economic Analysis Council (DEAC) as the means to pursue uniform economic policy throughout DoD, resolve any issues that may arise, and represent joint Military Service opinion to OSD.
APPLICABILITY. This instruction:
a. Applies to:
(1) OSD, the Military Departments, the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, and the DoD Field Activities, and all other organizational entities within the DoD (referred to collectively in this instruction as the "DoD Components").
(2) The evaluation of decisions about the startup research, acquisition, renewal, renovation, conversion, upgrade, expansion, pre-planned product improvement, leasing, or operations of all programs or projects issued under the authority of this instruction. The adoption of such programs and projects is expected to commit the government to a series of measurable expenditures or benefits beyond the inception date.
(3) Prescribed methodologies to all considerations for investment.
(4) The evaluation of decisions about:
(a) The use of real property or other assets, such as by lease or purchase.
(b) The acquisition of automated information systems.
(c) The acquisition of weapons systems and weapons systems support. Analytic studies and Business Case Analysis (BCA) that deal with cost and effectiveness considerations in those areas are considered to be "economic analyses" (even though not specifically titled as such) and must adhere to the policy in this instruction in accordance with DoDDs 5000.01 and 4275.5 (References (d) and (e)).
b. Does not apply to decisions about:
(1) Federal energy management and planning programs. These programs must follow the guidance in Part 436 of Title 10, Code of Federal Regulations (Reference (f)).
(2) Commercial activities, including commercial-type services by government or contractor operation that would not fall under paragraph 2a(4).c above the signature.
(3) The Army Corps of Engineers water resource projects. Guidance for these projects is the approved economic and environmental principles and guidelines for water and related land resources implementation studies.
(4) Programs or projects that involve costs or quantifiable benefits primarily external to the Federal Government. Analyses for those types of programs or projects are addressed as "public investment and regulatory analyses" in accordance with Reference (c).