Our interest is in the design process that spans the gap between lhe requirements acquisition process and the implementation process, in which the basic architecture of a system is defined, and functions are allocated to software, hardware, and human agents. We call this process composite system design. Our goal is an interactive model of com­posite system design incorporating deficiency-driven design, formal analysis, incremental design and rationalization, and design reuse. We discuss knowledge representations and reasoning techniques for the product (composite system) that we are designing, and for the design process, which support these goals. To evaluate our model, we report on its use to rationally reconstruct the design of two existing composite systems.