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Report examining growth in operating and support (O&S) costs of major DOD weapons systems, and identifying measures to improve DOD ability to manage and reduce O&S costs of weapons systems over their life cycle.
As weapon system life cycle costs have risen, DoD has placed new emphasis on examining the operating and support (O/S) cost impacts of planned new weapons and finding ways to reduce these costs. O/S cost analyses are now a major part of the cost review conducted at each weapon procurement decision meeting by the Defense Systems Acquisition and Review Committee (DSARC) and the Cost Analysis Improvement Group. This report recommends guidelines for preparing and presenting estimates of the support investment (SI) and O/S costs of fixed and rotary wing aircraft systems to DSARC. It provides a framework for objective comparison of SI and O/S costs of program, design, or support alternatives, using consistent methodologies and terminology. It also focuses on assessment of efforts to control downstream costs of weapon systems in the acquisition phase. A general methodology for SI and O/S cost-estimating is described, a standard cost element structure is defined, and specific requirements for presenting SI and O S cost estimates to DSARC are proposed. Standards for the presentation and documentation of those cost estimates are recommended.
The USAF Visibility and Management of Operating and Support Cost (VAMOSC) system is an information system which reports historical O&S costs of Air Force weapon systems. Source data for VAMOSC comes from a number of USAF financial, logistics, inventory, and operating systems. This centralization and consolidation of O&S cost data provides information that helps weapon system managers and planners make better decisions for DoD and USAF in the operation, maintenance, and management of weapon systems. In earlier analysis, flyaway costs, flying hours, number of aircraft and aircraft fleet age were identified as important variables for explaining and predicting O&S Costs. The earlier models need to be re-estimated to determine whether aircraft types and operation mission types are applicable and how they have separate effects on O&S costs. This thesis shows that the structure of the earlier models continues to be applicable. The models, therefore, are a useful tool for understanding the determinants of O&S cost.
"The Department of Defense (DOD) spends billions of dollars each year to sustain its weapon systems. These operating and support (O&S) costs can account for a significant portion of a system's total life-cycle costs and include costs for repair parts, maintenance, and personnel. The Weapon Systems Acquisition Reform Act of 2009 directs GAO to review the growth in O&S costs of major systems. GAO's report addresses (1) the extent to which life-cycle O&S cost estimates developed during acquisition and actual O&S costs are available for program management and decision making; (2) the extent to which DOD uses life-cycle O&S cost estimates after systems are fielded to quantify cost growth and identify its causes; and (3) the efforts taken by DOD to reduce O&S costs for major systems. GAO selected seven aviation systems that reflected varied characteristics and have been fielded at least several years. These systems were the F/A-18E/F, F-22A, B-1B, F-15E, AH-64D, CH-47D, and UH-60L. "
The U.S. Air Force Visibility and Management of Operating and Support Costs (VAMOSC) Program Office is responsible for the development of the Air Force VAMOSC data systems. VAMOSC currently consists of three data systems that collect and report the operating and support (O & S) costs for USAF aircraft at the mission/design/series level, components of aircraft systems at the work unit code level, and ground communications-electronics systems at the type/model/series level. The three data systems are: Weapon System Support Cost (WSSC), Component Support Cost System (CSCS), and Ground Communications-Electronics (C-E). The Air Force has several uses for VAMOSC data, including (1) to support planning and budgetary input to the Defense System Acquisition Review Council (DSARC) process for acquisition of new weapons systems, and (2) to aid the Program Objective Memorandum (POM) process to identify existing systems for possible modification. The objective of Task 1 is to identify the current and future data requirements imposed on the VAMOSC system. The data requirements will drive the evaluation of alternative technologies that will process and store VAMOSC-produced data. We employed two techniques to obtain the desired information: (1) a survey of the current and potential VAMOSC user community, and (2) measurement of the current VAMOSC data systems.
Although life cycle analysis is widely used as a management tool, considerable uncertainty still exists about its effectiveness with respect to economic tradeoffs, funding decisions, and resource allocations. This report evaluates some of the most widely used life cycle cost models: AFR l73-10 models (BACE and CACE); the Logistics Support Cost model; the Logistics Composite model; the MOD-METRIC model; AFM 26-3 Manpower Standards; Air Force Logistics Command Depot Maintenance Cost Equations; the DAPCA model; and the PRICE model. The models are rated within a framework incorporating a set of cycle cost elements and a set of cost driving factors. Color-coded illustrations summarize the results. The models are shown to have many shortcomings that limit their usefulness for life cycle analyses in which estimates of absolute, incremental cost are required. Specific areas are identified where driving factor/cost element combinations are not adequately addressed.
Systematically examining the empirical relationship between multiple U.S. Air Force systems' expenditures, flying hours, and fleet sizes, this research suggests a more sophisticated way to think about Air Force costs than is currently used. The report discusses prior research on cost-per-flying-hour calculations--i.e., the practice of multiplying projected flying hours by a cost-per-hour factor in certain segments of the budgetary process. This report looks across Air Force mission designs (systems) and estimates general, historical relationships between expenditure levels and flying hours. A fixed-plus-variable cost structure is estimated with expenditures neither increasing nor decreasing in proportion to flying hours. The author concludes with the policy implications of his findings, noting that current Air Force budgeting approaches likely overestimate funding needs when flying hours are increasing and underestimate needs when flying hours are decreasing.
"Prepared for the Office of the Secretary of Defense."