Review of Life Cycle Cost Concept

PSAD-78-74: Published: Mar 2, 1978. Publicly Released: Mar 2, 1978.

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A former report, "Life Cycle Cost Estimating--Its Status and Potential Use in Major Weapon System Acquisitions," included recommendations that the Department of Defense explore approaches to accumulating ownership costs for systems under development and standardize costs elements included in life-cycle costs (LCC) estimates. Actions have been initiated encouraging the use of LCC considerations in decisionmaking, but progress has been slow. Issuance of guidance and operating and support (O&S) costs accumulation and reporting has been spotty, and the effect of initiated actions is just being recognized. Issues requiring attention are: accountability for meeting O&S cost goals is unclear, assumptions for developing O&S estimates are not updated to show changes in program requirements, O&S estimates are not reported to the Congress, costs of O&S data are not compared to benefits, and more LCC training is needed. To make LCC a viable factor in controlling O&S costs, the Secretary of Defense should: accelerate efforts to provide uniform and standard costs definitions and cost-estimating guides, hold program managers accountable for O&S costs, require systematic updating and reporting of LCC estimates, and provide program managers expert cost analysts to assist in LCC decisions and tradeoffs.

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