Expanding Operating and Support Cost Analysis for Major Programs During the DoD Acquisition Process

The Weapon System Acquisition Reform Act of 2009 established the Office of Cost Assessment and Program Evaluation (CAPE) in the Office of the Secretary of Defense and mandated a broad set of cost analysis duties, including conducting independent cost estimates (ICEs) and independent cost assessments (ICAs) for major defense acquisition programs at key acquisition milestones. Subsequent laws have mandated additional duties, especially related to program operating and support (O&S) costs, including requirements to conduct or approve life-cycle cost estimates early in acquisition, identify risk drivers in estimates at milestone decisions, and examine alternatives that may reduce O&S costs. The authors assessed the cost analysis requirements for O&S costs by reviewing relevant laws and U.S. Department of Defense (DoD) guidance; assessed the resources available to conduct the analyses, including numbers of cost-estimating personnel, the data typically available to inform cost analyses, and cost-estimating processes and timelines; interviewed government and industry subject-matter experts to understand past and current DoD cost-analysis activities; reviewed the literature; and developed recommendations to improve weapon system O&S cost analysis during the acquisition phase. The authors found that CAPE lacks sufficient personnel and data to perform all the cost activities mandated by law or to do them with rigor. Recommendations include steps to match CAPE personnel levels with the workload and provide cost analysts access to the relevant data, including expertise in product-support activities, needed to inform cost estimates.