Transcript CAIG Review of FCS Activities to Date

Weapon System Sustainment:
Collection of Contractor Costs
Walt Cooper
OSD Cost Analysis Improvement Group (CAIG)
August 13, 2008
OSD CAIG
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Outline
• Background and purpose
• Current status
• Issues
• Next steps
OSD CAIG
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O&S Costs Represent Largest Fraction of Life
Cycle Costs, by Far
Rotary Wing Aircraft
Ground Combat Systems
3%
4%
24%
28%
68%
73%
Fighter Aircraft
Surface Ships
1%
4%
25%
39%
60%
71%
OSD CAIG
RDT&E
Procurement
O&S
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O&S Cost Analysts’ Major Responsibilities
• Preparation of life cycle cost estimates
• Formulation of budgets and programs
• Analysis of working capital funds
• Development of business case analyses
• Support of contract negotiations
Success depends on analysis of actual O&S costs organized in a
standard O&S Work Breakdown Structure (WBS)
OSD CAIG
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The Source of O&S Actuals:
Visibility and Management of Operating and Support Costs
(VAMOSC)
• Only source of ready data on actual operating and support (O&S) costs of
weapon systems
• Evolution
–
In 1974, Military Departments began developing programs for collection of
actual O&S costs
–
Initial systems largely manual
–
In mid-1990s, Military Departments introduced automation
• Army OSMIS (Operating & Support Management Information System)
• Navy: Naval VAMOSC and USMC VAMOSC
• Air Force Total Ownership Cost (AFTOC)
–
Today, VAMOSC systems are state-of-the-art information systems with growing
numbers of users
• Data provided in standard WBS
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Today’s VAMOSC Program
Number of systems
tracked
Data sources
Active user accounts
Army
(OSMIS)
Navy
(VAMOSC)
Air Force (AFTOC)
Almost
1,500
1,800+
35
138
14
1,000+
700+
700+
> 200 weapons, hundreds
of sub-systems
> 200 base operating
accounts
More than 2,500 active users across DoD.
OSD CAIG
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An Illustration – The Navy’s F-18C
($M, FY 2005 constant)
1.0 Mission Personnel
2.0 Unit Level Consumption
3.0 Intermediate Maintenance
4.0 Depot Maintenance
5.0 Contractor Support
6.0 Sustaining Support
7.0 Indirect Support
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005
320
700
137
68
13
168
7
328
827
132
96
17
122
7
339
865
159
80
25
173
7
333
772
176
78
15
186
6
337
761
200
131
17
236
6
1,406
1,522
1,640
1,560
1,682
Historically, contractor support has represented a small percentage of O&S costs.
But that is changing…
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Current Trends
•
Greater reliance on industry partners for sustainment
– Many forms -- traditional Contractor Logistics Support (CLS), PBL,
DVD
– More use of public-private maintenance partnerships
– Establishment of Product Support Integrators
•
Industry supports sustainment of a growing number of aviation
systems
•
MRAP JPO relying extensively on industry
for sustainment of MRAP in theater
OSD CAIG
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F-22A O&S Costs
(Then-year dollars in millions)
FY 2003 FY 2004
FY 2005 FY 2006 FY 2007
1.0 Mission Personnel
2.0 Unit-Level Consumption
5.0 Contractor Support
6.0 Sustaining Support
7.0 Indirect Support
3
3
8
<.5
6
17
8
13
<.5
17
47
18
17
<.5
11
89
51
408
<.5
15
123
72
471
<.5
32
Total from AFTOC
ICS (not reported in AFTOC)
20
237
56
337
92
376
564
0
699
0
Grand Total
257
393
469
564
699
Average Inventory
YTD Flying Hours
3
123
12
1,637
34
3,333
56
8,764
80
13,512
OSD CAIG
Sources: AFTOC, AFMC 778 AESG/FM
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# of Queries
Demand for CLS data is growing… top queries
in FY 2008 for OSMIS
4500
4000
3500
3000
2500
2000
1500
1000
500
0
OSD CAIG
Type of Query
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About The Project
•
Objective: To recommend policy and procedures for collection
of contractor costs in weapon system sustainment
arrangements
•
To be completed in FY 2009
•
Collaborative effort among the CAIG, OUSD (AT&L), and all
military departments
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Current Status
•
Currently, numerous programs have proposed CSDR plans
–
–
•
Working these on a case-by-case basis
Plans map to O&S Cost-Estimating Guide WBS
Long term
–
Establish formal regulatory requirements
• Draft DoDI 5000.2 establishes requirement for sustainment contract cost
reporting
• AR 700-142 (approved 26 Mar 08) requires program offices to provide O&S
costs
–
Develop formats and procedures for collection
• Draft to be vetted with military departments this summer
• Will conduct workshops with selected program offices
– Global Hawk (August 14)
– JSTARS (August 15)
– T-45 (August)
– Stryker (?)
• Maintain dialog with industry
OSD CAIG
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CSDR Sustainment Plans
Program
Contractor
Status
F-119 engine (F-22A)
Pratt & Whitney
• Approved
• Under contract week of 11 Aug 08; expected CY
2008 value of $215 million
F-22A air vehicle
Lockheed Martin
• In final review
• Expect to submit for approval week shortly;
expected CY 2008 value is $653 million
F-414 engine sustainment (F/E18E/F)
General Electric
• Approved
• Under contract; PoP: 1 Apr 2008 – 31 Dec 2010;
contract value: $90 million
F/A-18E/F Integrated Logistics
Support
Boeing
F-35
Lockheed Martin, Northrop
Grumman, BAE
• Approved; undergoing mods to reflect contract
changes
• Will be re-submitted shortly
• Approved
• Under contract
OSD CAIG
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CSDR Sustainment Plans (Cont’d)
Program
Stryker
Joint Cargo Aircraft
C-5M RERP Interim Contractor Support
Light Utility Helicopter
V-22 Air Vehicle Joint PBL
Contractor
General Dynamics
L-3
Lockheed Martin
EADS
Bell-Boeing
Status
In development
• Approved
• Under contract; PoP: 29 Aug 2007 – 29 Nov 2011;
contract value: $2 billion
In development
• Approved
• Data submitted
• Approved
• Will go under contract 1st Qtr, FY 2009
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Cost Analysts’ Desired Outcomes
•
Periodic reports needed -- annual submissions preferred
– To be used for updating budgets and programs, analysis of Working
Capital Fund requirements
– Consistent with VAMOSC system updates
– However, must be synchronized with contract milestones
•
Program and contract plans consistent with CSDR
– O&S cost WBS
– Other items, e.g, G&A, undistributed budget, fee
•
Reports submitted directly to DCARC
•
Subsequently sanitized and incorporated into VAMOSC systems
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Issues to Address
• Protection of proprietary data
• Reporting frequency
• WBS/Level of detail
• Thresholds
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Next Steps
• Continue to work with program offices on current
plans
• Vet proposed standard formats and instructions with
departments and industry
• Update cost-reporting appendix to DoD 5000.4-M,
“Department of Defense Cost Analysis Guidance
and Procedures Manual”
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