Key Issues > Duplication & Cost Savings > GAO's Action Tracker > Sustaining Weapon Systems (2011-40)
defense icon, source: [West Covina, California] Progressive Management, 2008

Defense: Sustaining Weapon Systems (2011-40)

More comprehensive and complete cost data can help the Department of Defense improve the cost-effectiveness of sustaining weapon systems.

Action:

The Department of Defense (DOD) should revise guidance to specifically require the retention of life-cycle operating and support (O&S) cost estimates for major weapon systems, as well as the supporting documentation used to develop these estimates.

Progress:

DOD revised its guidance to require the retention of life-cycle O&S cost estimates for major weapon systems and the supporting documentation used to develop these estimates, as GAO recommended in July 2010. In November 2013, DOD issued Interim DOD Instruction 5000.02, which required major weapon system programs to retain the DOD Component and Service Cost Agency O&S cost estimates developed at any time during the life-cycle of the system.1 According to the instruction, copies of reports, briefings, and other supporting documentation used to prepare the cost estimates must also be retained. The instruction specifically includes documentation used to prepare cost estimates for acquisition milestones and other program reviews, as well as those incorporated into Selected Acquisition Reports. This revised guidance could improve the collection, retention, and analysis of O&S cost data—steps that would significantly enhance DOD’s ability to manage and potentially reduce weapon system O&S costs.

[1] See Interim Department of Defense Instruction 5000.02, Operation of the Defense Acquisition System, encl. 10 (Nov. 25, 2013).

Implementing Entity:

Department of Defense

Action:

The Department of Defense (DOD) should identify the cost elements needed to track and assess actual operating and support (O&S) costs for effective cost analysis and program management for major weapon systems, and require the collection of these elements in the services' O&S cost visibility data systems.

Progress:

DOD revised its guidance to identify cost elements for tracking and assessing actual O&S costs that the services should collect in their cost visibility data systems, as GAO recommended in July 2010. The National Defense Authorization Act for Fiscal Year 2012 required the Secretary of Defense to issue guidance regarding O&S costs for major weapon systems, including establishing standard requirements for the collection of data on O&S costs for major weapon systems and requiring the military departments to revise their cost visibility data systems to ensure that they collect complete and accurate data and make such data available in a timely manner.1 In March 2014 the Director, Cost Assessment and Program Evaluation (CAPE), issued revised cost-estimating guidance and included acost element structure that categorizes and defines specific cost elements.2The guidance indicates that, to the greatest extent feasible, the services’ O&S cost visibility systems should support this structure. The guidance also notes that CAPE conducts annual reviews of the cost visibility data system programs, addressing data accessibility, completeness, timeliness, accuracy, and compliance with CAPE guidance. The revised guidance, when implemented by the services, shouldimprove the collection, retention, and analysis of O&S cost data—steps that should significantly enhance DOD’s ability to manage and potentially reduce weapon system O&S costs.

 

1SeePub. L. No. 112-81, § 832(a), (b)(4), 125 Stat. 1298,1504-05 (2011).

2 SeeOffice of the Secretary of Defense: Cost Assessment and Program Evaluation, Operating and Support Cost-Estimating Guide (March 2014).

Implementing Entity:

Department of Defense

Action:

The Department of Defense (DOD) should require the services to periodically update life-cycle operating and support (O&S) cost estimates for major weapon systems after these systems are acquired, which would enhance DOD's ability to compare actual performance to planned or expected results.

Progress:

DOD revised its guidance to require that the life-cycle O&Scost estimates for major weapon systems be updated periodically, as GAO recommended in July 2010.In November 2013, DOD issued Interim DOD Instruction 5000.02, which required the military departments to update estimates of O&S costs periodically throughout the life-cycle of a major weapon system to (1) determine whether preliminary information and assumptions remain relevant and accurate and (2) identify and record reasons for variances.1 Further, according to the instruction, an independent review of O&S cost estimates must be conducted at reviews held after a program reaches initial operational capability. Each O&S cost estimate must be compared to earlier cost estimates and the comparison must identify the reasons for significant changes.Periodic updates of O&S costs throughout the life-cycle of weapon systems could significantly enhance DOD’s ability to manage and potentially reduce weapon system O&S costs.

[1]See Interim Department of Defense Instruction 5000.02, Operation of the Defense Acquisition System, encl. 10 (Nov. 25, 2013).

Implementing Entity:

Department of Defense

Action:

The Department of Defense (DOD) should require program offices to collect and report detailed support cost data for their performance-based logistics arrangements.

Progress:

DOD revised its guidance to clarify the detailed operating and support (O&S) cost elements that should be collected and reported for certain contractor-supported weapon systems, including performance-based logistics arrangements, as GAO recommended in December 2008. In November 2010,DOD added a clause in the Defense Federal Acquisition Regulation Supplement (DFARS)that requires detailed cost reporting for contracts for major defense acquisition programs and major automated information system programs above $50 million. The DFARS further allows managers for these types of programs with contracts valued between $20 million and $50 million to direct the use of this clause with the approval of the Deputy Director for Cost Assessment.1 In 2012, the Director, Cost Assessment and Program Evaluation (CAPE) identified specific O&S cost elements and developed a Contractor Sustainment Report form for the consistent collection and reporting of this detailed O&S cost data. In March 2014 CAPE revised its cost-estimating guidance, noting the requirement to use the form in applicable sustainment contracts.2 The revised guidance provides additional clarification that should improve the collection and analysis of O&S cost data from contractors—a step that should significantly enhance DOD’s ability to manage and potentially reduce weapon system O&S costs.

 

1See48 C.F.R. (DFARS) § 252.234-7004; see also DFARS §§ 234.7100, 234.7101, 252.234-7003. DOD made minor amendments to the clauses and provisions in 2014. The general cost reporting requirements are also presented in a table in Department of Defense Instruction 5000.02, Operation of the Defense Acquisition System (Jan. 7, 2015).

2SeeOffice of the Secretary of Defense: Cost Assessment and Program Evaluation, Operating and Support Cost-Estimating Guide (March 2014).

Implementing Entity:

Department of Defense

Action:

The Department of Defense (DOD) should revise guidance to require the development of performance-based logistics business case analyses to better support the decision-making process on the use of performance-based logistics arrangements.

Progress:

DOD revised its guidance to require the development of business case analyses used to develop product support strategies, such as performance-based logistics arrangements, as GAO recommended in December 2008.In November 2013, DOD issued Interim DOD Instruction 5000.02, which required the development of a weapon system Life Cycle Sustainment Plan, including an annex providing a business case analysis for the product support strategy.1According to the instruction, program managers for all programs are responsible for developing and maintaining a Life Cycle Sustainment Plan beginning at the first acquisition milestone, to be updated at each subsequent decision point.Further, the instruction requires product support managers to revalidate the business case analysis based on changes or every 5 years, whichever occurs first.DOD’s revised instruction could improve the decision-making process for sustainment of weapon systems by evaluating performance-based logistics arrangements to determine if they are the most cost-effective strategy.

[1] The interim instruction also calls on program managers to employ effective Performance-Based Logistics planning, development, implementation, and management in developing a system’s product support arrangements.See Interim Department of Defense Instruction 5000.02, Operation of the Defense Acquisition System, encl. 6 (Nov. 25, 2013).

Implementing Entity:

Department of Defense

Action:

The Department of Defense (DOD) should define the elements to be included in performance-based logistics business case analyses so they are comprehensive and sound.

Progress:

In April 2011, DOD issued a Product Support Business Case Analysis Guidebook that provides additional details regarding the elements of a business case analysis. The updated guidebook also indicates that program offices will revalidate the previous product support strategy business case analysis every 5 years or prior to a change in the weapon system’s product support strategy, as required of product support managers by a provision in the National Defense Authorization Act for Fiscal Year 2010.1

[1] See Pub. L. No. 111-84, § 805(b)(2)(F), 123 Stat. 2190, 2403 (2009) (codified as amended at 10 U.S.C. § 2337(b)(2)(G) by the National Defense Authorization Act for Fiscal Year 2013, Pub. L. No. 112-239, § 823(a)(1), 126 Stat. 1632, 1830-32 (2013)).

Implementing Entity:

Department of Defense
  • portrait of
    • Diana Maurer
    • Director, Defense Capabilities and Management
    • maurerd@gao.gov
    • (202) 512-9627