1 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Research Conclusion & Background Methodology Findings Objective Recommendations Presented by Rob Tremaine Presented by Donna Seligman Associate Dean, Outreach & Mission Assistance Manager, Management Information Systems DAU West Region DAU West Region San Diego, CA San Diego, CA donna.seligman@dau.mil robert.tremaine@dau.mil
2 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Research Objective Acquisition What this Research was About Life Cycle Operations & Review Total Life Cycle Cost Management Support (LCCM) theories in the Context of Cost Containment Solicit Program Mangers’ overall Views on C Engineering LCCM and Cost Containment & . Manufacturing Development Identify LCCM technique PMs Practice B Today and their Usefulness, Applicability & Technology Opportunities Development A Find More Aggressive Cost Containment Strategies and Methodologies that Could Materiel Solution Shift Acquisition Outcomes Upward and Analysis Contain Costs
3 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Background Programmatic Hurdles . Schedule Cost Estimating Technology Funding
4 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Background Various Tools TRLs/MRLs EVMS CAIV PBL CARD Technical Processes
5 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology Literature Historical Look Review Solicit Perspectives Focus + & Beta Test Survey Groups Field Experiences LCCM + & Perspectives Survey Findings = Recommendations + & Data & Conclusions Analysis
6 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology LCCM Model Timeline 1969 1975 1983 1986 1995 2002 1936 1971 1978 1985 1988 1996 20XX ACEIT T.P. Wright MAAP EDCAS R. Butler (86 USAF at created cost (child of EDCAS) Systems Hanscom estimating LCCH 5000.1 Exchange - now w/Tecolote equations to issued controlled by Research) LCCA predict the TFD 5000.2 ZCORE cost of (was LCC-2) Criticisms of high issued (USAF) airplanes on (Northrop cost, ASD production LCC Manual for Grumman) ? (Acquisition and runs Federal Energy Logistics) Management Milestone III chair PRICE with Program (US Gov) RCA CASA by F. Freiman invented Corporation Defense parametric cost FLEX (by NAVAIR) ACARA - Systems modeling later now Management develops into controlled by Military Handbook College in PRICE LCC in Navy NASA cooperation Acquisitions with Honeywell (now controlled by LOGSA)
7 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology Quantify LCC Models LCC Model Types Model Owners Applicability & Ease of Use Data Dependencies Current users Usefulness & Model Across Life Cycle Limitations ACARA Availability, Cost, And NASA ? ? ? ? Resource Allocation CASA Cost Analyses Strategy LOGSA ? ? ? ? Assessment EDCAS Equipment Designer’s TFD Group ? ? ? ? Cost Analysis System MAAP Monterey Activity-base TFD Group ? ? ? ? Analytical Platform FLEX Navy Material NAVAIR ? ? ? ? Command LCC Model LCCA Life Cycle Cost Analyzer Northrop ? ? ? ? Grumman LCCH Life Cycle Cost Model Air Force(TASC) ? ? ? ? Price Family of Models for Lockheed Martin ? ? ? ? Costing/Evaluation ZCORE Cost Oriented Resource USAF ? ? ? ? Estimating Model ACEIT Automated Cost (USAF, USA) ? ? ? ? Estimating Integrated Tools
8 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology Focus Group Comments Session 1 LCCM discussions tend to be short-lived Apparent lack in LCCM discipline and absence of cross communication in programs that generally need it the most Funding allocations and key decisions typically seem to be focused on development and not sustainment “ iIlities ” are generally not well -defined enough Establish a formulary similar to TRLs where a program could not proceed to the next phase until it demonstrated some minimum level of achievement Institute a LCC breach construct (similar to the intent behind Nunn- McCurdy breaches
9 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology Focus Group Comments Session 2 LCCM typically suffers from a lack of sufficient cost detail to adequately address sustainment costs that predominate once systems find their way into operations Funding instability makes cost containment insurmountable Funding instability creates a gyrating funding baseline on top of other strategic concerns including: Industry partners who are not necessarily motivated by cost containment Frequent changes in requirements Internal staffing shortfalls that are sometimes tough to fill Lack of certain key functional experience in program offices, and Cultural realities that emphasize program survival over program affordability
10 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Methodology LCCM Survey Survey Target Audience Eight hundred and eighty-seven current and former DoD Acquisition Professionals responded to this survey Five hundred and forty three respondees were either current or former DoD Program Managers Solicited Views on Cost Containment including various tool types and associated processes were Solicited Analysis centered on PMs with over 11 years of experience in ACAT IC and ID programs.
11 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Findings Data Analysis-Quantitative ACAT I Program Managers with over 11 years of experience LCCM No Thoughts based on Experience with Experience Models Model with Model Not Familiar One of the . Not Useful Useful or Not Used Best ACARA 87% 2% 10% 1% CASA 78% 2% 18% 2% 90% EDCAS 2% 7% 1% 89% MAAP 2% 7% 2% 91% FLEX 3% 4% 2% 72% LCCA 3% 22% 4% 74% LCCH 2% 21% 3% 73% PRICE 2% 23% 3% ZCORE 92% 2% 3% 0% ACEIT 70% 2% 24% 4%
12 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Findings Data Analysis-Quantitative ACAT I Program Managers with over 11 years of Experience select Life Cycle Phases where the Life Cycle Cost Models made Impact In what A B C IOC FOC Materiel Technology Engineering and Production & Operations & Life Cycle Phases Solution Development Manufacturing Development Deployment Support Analysis Don't ICD None know CDD CPD are the Materiel FRP Post PDR Post CDR Development Assessment Decision Assessment Decision Review Life Cycle Models … AoA PDR PDR CDR Sustainment Pre -Systems Acquisition Systems Acquisition . ` a good cost predictor? 14 19 59 68 67 45 31 .
13 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Findings Data Analysis-Quantitative ACAT I Program Managers with over 11 years of Experience select Life Cycle Phases where the Life Cycle Cost Models made Impact In what A B C IOC FOC Materiel Technology Engineering and Production & Operations & Life Cycle Phases Solution Development Manufacturing Development Deployment Support Analysis Don't ICD None know CDD CPD are the Materiel FRP Post PDR Post CDR Development Assessment Decision Assessment Decision Review Life Cycle Models … AoA PDR PDR CDR Sustainment Pre -Systems Acquisition Systems Acquisition . most influential in driving ` 45 66 91 41 34 20 28 decisions? .
14 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Findings Data Analysis-Quantitative ACAT I Program Managers with over 11 years of Experience select Life Cycle Phases where the Life Cycle Cost Models made Impact In what A B C IOC FOC Materiel Technology Engineering and Production & Operations & Life Cycle Phases Solution Development Manufacturing Development Deployment Support Analysis Don't ICD None know CDD CPD are the Materiel FRP Post PDR Post CDR Development Assessment Decision Assessment Decision Review Life Cycle Models … AoA PDR PDR CDR Sustainment Pre -Systems Acquisition Systems Acquisition . ` suitable for cost containment? 15 28 52 64 48 56 33 .
15 It’s Time to Take the Chill Out of Cost Containment and Re-energize a Key Acquisition Tool Findings Data Analysis-Quantitative ACAT I Program Managers with over 11 years of Experience select Life Cycle Phases where the Life Cycle Cost Models made Impact In what A B C IOC FOC Materiel Technology Engineering and Production & Operations & Life Cycle Phases Solution Development Manufacturing Development Deployment Support Analysis Don't ICD None know CDD CPD are the Materiel FRP Post PDR Post CDR Development Assessment Decision Assessment Decision Review Life Cycle Models … AoA PDR PDR CDR Sustainment Pre -Systems Acquisition Systems Acquisition . ` 65 82 107 58 60 18 32 significantly underestimated?
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