In acquisition terminology, what is a threshold?

In acquisition terminology, a threshold refers to the minimum acceptable value for performance or cost that must be met for a project or system to be considered viable. This is crucial in the acquisition process, as it establishes the baseline that ensures a system meets essential requirements before it can be accepted or proceed to the next phases of development.

Setting a threshold allows stakeholders to have a clear understanding of the minimum level of performance or cost-efficiency required. It serves as a safeguard, ensuring that the acquisition will deliver a capability that meets at least the basic operational needs. If the performance or cost does not meet this threshold, the program may be re-evaluated or even canceled, depending on the severity of the shortfall.

This concept is particularly important as it informs decision-makers during the evaluation of proposals, bids, or even ongoing projects, ensuring that resources are allocated effectively and that the final outputs are acceptable. The clarity provided by defining a threshold helps to avoid ambiguity in performance and cost expectations within acquisition programs.