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The final stage of the proposed research was completed during this performance period. The focus of this work was on integrating the composite damage analysis programs into a framework where they could be effectively used for design optimization. Critical to this phase of the work was a problem formulation that took into consideration the multiscale nature of the damage process, and fully accounted for the residual life in the composite structure in a post-failure (local failure mode). A system effectiveness approach was developed as a logical framework for the design problem formulation. This approach fully accounts for the probabilities of going from one state of structural damage to another. The problem formulation also allows for creating objective criteria that include system reliability and residual life in the structure. The approach was demonstrated using simple composite design problems.