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Research Question

  1. What process does the Department of Defense use to obtain life-cycle cost-effective facilities?

The Department of Defense (DoD) constructs, operates, and maintains a large number of facilities, such as barracks, hangars, and administrative buildings. In fiscal year 2013, DoD will spend nearly $10 billion constructing new facilities, and about the same amount or more operating and maintaining existing facilities. By focusing on reducing the life-cycle costs of its facilities, DoD can minimize its total cost of facility ownership. Accordingly, DoD incorporates life-cycle cost-effective practices into many aspects of the military planning and construction processes, but challenges and opportunities in the process remain. This report provides RAND's description and assessment of the process used to obtain life-cycle cost-effective facilities and how that affects DoD construction options and choices.

The research approach featured structured interviews with more than 30 individuals with varying roles and perspectives on the military construction (MILCON) and facility sustainment processes. The research team also reviewed MILCON protocols, policies, documents, and contracts to characterize the process of obtaining life-cycle cost-effective facilities. At each step of the MILCON process, there are different entities, roles, incentives, and barriers to obtaining life-cycle cost-effective facilities. Aligning the incentives of these various entities, and removing funding, information, timing, and resource barriers, would enable DoD to obtain facilities that are more life-cycle cost-effective.

Key Findings

Aligning the Incentives of the Various Entities at Each Step of the MILCON Process and Removing Funding, Information, Timing, and Resource Barriers Would Enable DoD to Obtain Facilities That Are More Life-Cycle Cost-Effective

  • DoD is currently incorporating life-cycle cost-effectiveness practices in many aspects of the MILCON process.
  • Information, funding, and organizational issues create barriers to life-cycle cost-effectiveness for facilities.
  • Requiring contractors to demonstrate life-cycle cost-effectiveness in proposals could raise costs and risks without guaranteeing commensurate savings.
  • Improving standards and performance guidelines to include life-cycle cost-effectiveness elements into the planning, design, and construction processes remains an opportunity.
  • Construction materials are largely dictated by building codes rather than by the services.
  • Life-cycle cost benchmarking across services and with comparable institutions can assist decisionmaking.


  • To align life-cycle cost incentives, Congress could test the efficacy of providing MILCON; Sustainment, Restoration, and Modernization; and Base Operations Support funding in one single appropriation, with the ability to reprogram and optimize funding between these functions.
  • DoD should analyze the life-cycle cost outcomes of the current very limited amounts of construction undertaken with Sustainment, Restoration, and Modernization funding to examine whether outcomes differ from MILCON programing.
  • The appropriate level of fire protection for DoD facilities is an important area for future analysis, but deviating from the current level of fire protection to reduce life-cycle costs would only be prudent if overall casualty risk from fires did not increase as a result.
  • DoD should obtain design, construction, and contracting lessons learned from performance-based contracting approaches undertaken by other government entities used to incentivize building commissioning and verification of energy and other operating cost savings.
  • Any proposed design standardizations should be adaptable to new technologies and provide opportunities for locally led efficiencies.

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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