A new methodology of Capability Based Planning is introduced, and a bilevel programming model to allocate resources at military capability and system level is presented. The upper level of the model has two global objectives of effect and effect-cost ratio, which determines the constraint of investment scale to the lower. At the lower level, the optimal combinations of alternative systems are attained to maximize each kind of capabilities under the specified cost constraint, and then returned to the upper. To solve the bilevel programming model, the multiobjective genetic algorithm is adopted. The results of the presented example suggest that the bilevel programming model and its solution algorithm are valid to the problem of military acquisition and resource allocation.