Transcript CAIG Review of FCS Activities to Date

Weapon System Sustainment:
A Project to Identify Requirements for Collection of
Contractor Costs
OSD Cost Analysis Improvement Group
and
ODUSD (L&MR)/LPP and MR&MP
April 26, 2007
OSD CAIG
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Outline
• Context
• Purpose of the project
• Results to date
• 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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Major CAIG Responsibilities in O&S Costing
•
Preparation of independent cost estimates, per statute
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Reviews and analyses, e.g.,
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O&S Cost Guide
Fully Burdened Cost of Fuel
Budget and program displays -- depot maintenance, materiel system readiness
Oversight of Visibility and Management of Operating and Support Costs
(VAMOSC) program
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Establish policy
Promote standardization of cost element structures across the Components
Promote use of VAMOSC data to predict future costs
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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)
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The O&S Work Breakdown Structure
1. Mission Personnel – operators, maintenance personnel, staffs
2. Unit-Level Consumption – fuel/energy, consumable material and
repair parts and depot-level reparables
3. Intermediate Maintenance
4. Depot Level Maintenance – overhaul, re-work and other costs
5. Contractor Support – burdened cost of labor, material, and assets
6. Sustaining Support -- tools, test sets, modifications, sustaining
engineering support and software maintenance
7. Indirect Support
OSD CAIG
URL: http://dcarc.pae.osd.mil/osd_ces/index.html
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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)
~1,400
~1,740
35
138
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1,500+
720
600
> 200 weapons, hundreds
of sub-systems
> 200 base operating
accounts
More than 3,000 active users across DoD.
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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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Some Current Dynamics
•
Greater reliance on industry partners for sustainment
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Significant interest in the integration of acquisition and logistics
strategies
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Many forms -- traditional Contractor Logistics Support (CLS), PBL, DVD
More use of public-private maintenance partnerships
Establishment of Product Support Integrators
New, mandatory Key Performance Parameter (KPP): Materiel Availability
Several mandatory Key System Attributes, including Ownership Cost
Requirements for business case analyses of any proposed PBL
strategies
To provide useful advice to decision makers, cost analysts must have detailed
functional and cost information from contractors in sustainment arrangements.
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About The Project
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Requested by OUSD (AT&L)
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Co-sponsored by OUSD (AT&L) and OSD CAIG
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Collaborative effort among OSD and all three Military
Departments
•
Objective: To recommend policy and procedures for
collection of contractor costs in weapon system sustainment
arrangements
•
To be completed by fall 2007
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Project Approach
•
Understanding fully how contractors are providing sustainment
support
–
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Scope
Contract types
Cost reporting
Issues
Identify specific cost data requirements, e.g.,
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–
Frequency
Formats
Level of detail
•
Vet with industry partners
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Formalize in next update of DoDI 500.2, “Defense Acquisition
Management Policies and Procedures”
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Programs Reviewed
System/Program
Dept
Primary Contractor
Key Points
C-17*
AF
Boeing Integrated
Defense Systems
Total System Support
Responsibility (TSSR)
C-130J
AF
Lockheed Martin
F/A-18*
Navy
Boeing
Guardrail Common
Sensor
Army
DynCorp
Hunter UAV
Army
TRW/Northrop Grumman
Joint STARS*
AF
Northrop Grumman
TSSR
Northrop Grumman
Focuses on technology
upgrades, software
support
LPD-17
Navy
Many PBL-focused
contracts
Total Life Cycle
Support
Standard CLS
OSD CAIG
* On-site discussions with PMO.
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Programs Reviewed (Cont’d)
System/Program
Dept
Primary
Contractors
Key Points
Navy Inventory Control
Point –- Philadelphia*
Navy
Various
Predator UAV
AF
General Atomics
Sentinel Air Defense
Radar*
Army
Raytheon
Shadow UAV*
Army
AAI Corp.
Stryker*
Army
General
Dynamics Land
Systems
T-45TS Goshawk Training
Aircraft*
Navy
Boeing, BAE,
Rolls Royce
V-22 Engine
Navy
Rolls Royce
Major user of PBL
contracts
Traditional CLS
PBL
PBL
Army’s largest CLS
arrangement
Extensive use of
PBL
Power-by-the-HourTM
OSD CAIG
* On-site discussions with PMO.
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Key Findings
• Contract scopes can address more than one
function
– Total System Support Responsibility
– Product Support Integrator
– Use of public/private partnering agreements in
depots is significant, and growing
• Most major contracts are firm fixed price
• Cost reporting reflects requirements in CLINs…
tends to not conform to standard O&S cost WBS
that cost analysts use
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Cost Analysts’ Desired Outcomes
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Periodic reports needed -- annual submissions preferred
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Program and contract plans consistent with CSDR
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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
O&S cost WBS plus…
Reporting contractor’s G&A
Other reporting contractor’s miscellaneous
Reporting contractor undistributed budget
Reporting contractor’s management reserve
Reporting contractor’s FCCM
Reporting contractor’s profit or fee
Reports submitted directly to DCARC
Training program will be needed. Many issues still to be worked with
Military Departments and industry.
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Issues to Address
• Collection of contractor cost data on fixed price contracts
• Reporting frequency
• WBS/Level of detail
• Compliance
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Next Steps
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Resolve issues in IPT process
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Continue discussions with industry… Conduct
follow-on discussions in August NDIA forum?
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Identify staffing requirements at Defense Cost and
Resources Center
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Draft policy memo… Pilot programs likely
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Update DoDI 5000.2 and O&S Cost Guide
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