Few complex systems exhibit a binary set of states, that is only simple systems are limited to the basic states of operational and failed. Complex systems and Systems of Systems (SoS) take on multiple degraded states between the fully operational and fully failed extremes. However, reliability requirements often lack the necessary information to adequately allocate multi-state reliability to the sub-systems and components. Specifically, the criticality of functional failures is not defined in the requirements phase but rather, it is done just prior to test. A proposed requirements generation and allocation method is presented to enable more robust requirement sets specific to multi-state systems and SoS which in turn enables more effective and efficient design for reliability practices.