O&S Cost Team

1. O&S Cost Team Status Update 15 July 2011

2. Operating & Support (O&S) Cost Action Status • 1.1.4.1 Update Ownership Costs Key System Attribute (KSA) • JCIDS Working Group incorporated full O&S KSA Nov 2010 • KSA now includes all O&S costs elements • Programs currently reporting full O&S in DAES/SAR and Sustainment Quad Charts • 1.1.4.2 Standardize O&S Cost estimation methods and tracking • O&S team includes L&MR, CAPE, Service 4s/Secretariats, J-4, Industry • Standardize and establish traceability of costs from initial data sources through metrics used for O&S and Life Cycle Cost management decision making • Evolve the life cycle management framework to incorporate credible and consistently determined metrics for better buying power decisions • Informs Product Support Managers (PSM) how to develop and manage cost metrics • O&S Cost team deliverable – suite of products under development • Standardization of terminology through “O&S Glossary” (July 2011) • “Rosetta Stone” translation guide for Integrated Product Support Elements into CAPE O&S Cost Elements into Appropriations (Summer 2011) • Update 2007 CAPE O&S Cost Estimating Guide (Fall 2011) (“Will Cost”) • Complete O&S Cost Management Guidebook (Fall 2011) (“Should Cost”) • (PM/PSM decision making)

3. O&S Cost in Affordability BY $M conv. To CY11$M MDAP O&S Cost Totals Change from 2001 to 2010 • Better Buying Power Pilot Programs Ohio Replacement (OR) & Ground Combat Vehicle (GCV) link “will cost”/”should cost” in supportability analysis for a more affordable system • Navy, AT&L & CAPE are reviewing OR O&S cost drivers for savings initiatives to meet the annual O&S affordability target ($110M/hull/yr) • Army established GCV O&S affordability target ($200/mi). Life Cycle Cost estimate (O&S portion) in comparison to affordability target (O&S portfolio picture) will inform MDA at MS A decision review • As a Better Buying Power pilot program, F-35 will benefit from this same focus • Business Case Analyses assess Product Support Strategy alternatives • Alternatives provide affordability trade-offs among costs, benefits and risks • Preferred solution documented in Life Cycle Sustainment Plan (LCSP) • All data taken from annual SARs -Current databases track O&S costs

4. O&S Cost Management Guidebook Vision Aligned and synchronized operational, acquisition, and sustainment communities working together to deliver required and affordable Warfighter outcomes Strategy Operational, acquisition, and sustainment communities jointly recommend path forward to improve weapon system readiness and control life cycle cost Operational Plan Integrated Product Teams (IPTs), managed as part of an overarching implementation team, work together to make the interdependent changes needed to improve product support Execution Sub-IPTs identify and create specific products that implement the vision in accordance with the strategy and operational plan This team will improve DoD’s ability to manage O&S costs

5. OSD’s O&S Cost Management Guidebook Information • Primary Users • Product Support Manager • Program Manager • Program and Component Cost Analysts • PSIs • PSPs • Secondary Users • Industry Partners • Resource Sponsors • Operational Communities • Comptroller • CAPE • Purpose: Provide an overview of O&S Cost Management • Provide transparency to Program Management Offices on how O&S Cost estimates are captured throughout the life cycle management process and used by decision makers • Standardize O&S Cost metrics usage, nomenclature, and Life Cycle Product Support Management processes across the Department • Establish metrics which will inform decision makers throughout the life cycle on O&S costs AT&L controls the metrics portion and how O&S costs are included in decision making

6. CAPE’s O&S Cost Guidebook Information • Primary Users • CAPE • Program and Component Cost Estimators • Secondary Users • Product Support Manager • Program Manager • PSIs • PSPs • Purpose: Provide guidance on how to calculate O&S cost estimates • Update the 2007 CAIG Guide to reflect current policies and laws • Defines the Cost Elements Structure • Describes the CAPE process for creating a cost estimate • Describes the ICE’s role in the Department’s activities Notional: CAPE Still Defining CAPE control how O&S Costs are calculated (Cost Elements, etc.)

7. Proposed O&S Cost Deliverable Timeline OSD Operating & Support Cost Management Guidebook Begin Draft Guidebook Finish Draft Guidebook Staff Draft Guidebook O&S Cost Management Guidebook (Rev 0) Revise Outline CAPE Operating & Support Cost Technical Guidebook CAPE O&S Cost-Estimating Guide (Rev XX) (CAPE team will manage this schedule) Weapon System Operating and Support Cost Glossary of Terms Internal Team Review Complete Completed Staffing Signed Glossary White Paper Timelines IPS Elements/Appropriations/Cost Elements Crosswalk White Paper Metrics White Paper MR/CAPE Coordination Meeting PSAT O&S Cost Team Meeting

8. O&S Cost Management Guidebook Approach SEP 10 NOV JAN 11 JUN SEP JAN 12 Identify the Problem Define Objectives Research/ Define Gaps/Recommendations Construct Socialize Implement • 1. Brainstorm • 2. Research • Nomenclature • Cost Cycle • Data Retention • LCC Decision Nodes O&S Cost Management Guidebook (Goals are to consolidate current information and expand use for a larger audience) 1. Define Current State 2. Determine discrepancies 3. Provide Recommendations to team 4. Team validates recommendations 1. Write Sections of Guidebook 2. Draft Guidebook 1. Validate with DoD and Industry stakeholders 2. Adjudicate changes and publish final Guidebook (DEC 11) 1. Determine an implementation plan O&S Cost Management Guidebook O&S Cost Management Guidebook ExampleStakeholders • CAPE • Comptroller • Program Managers • Product Support Integrators • Type Commanders • Joint Staff Sub-Teams Sub-Teams Team Team Team Team MR Team MR Team • Find all O&S cost terms • Determine LCC decision making process, docs containing O&S costs, and execution and spend process • Agree on nomenclature definitions • Validate decision making framework • Validate O&S Cost Management Guidebook outline, work plan, and timeline • Use of O&S costs in ops planning and sustainment gov. • Determine gaps between guidebook’s as-written versus actual ability to execute • Combine existing knowledge and requirements for new knowledge development to form draft O&S Cost Management Guidebook • Validate with DoD and Industry stakeholders • Adjudicate changes and publish final Guidebook • Publish guidance & policy Key Team Actions

9. O&S Cost Management Guidebook

10. Introduction to O&S Costs across the Life Cycle

11. Role of O&S Cost Information

12. Organization of Life Cycle Management Elements

13. Crosswalk Update • Process

14. Metrics

15. Structured Approach Three different interrelated types of metrics that will be captured across the levels: Level 1 Level 2 Level 3 “Best Value”

16. Approach • Identify available metrics • Select metrics applicable to O&S • Validate applicability of the metric to the O&S environment • Categorize systems – for example, by commodity type: i.e., surface combatants, tracked combat vehicles, transport aircraft, etc. • Develop overarching metric that can be peeled back to show DoD, Service, and system information

17. Notional Operational Availability Metric Not inclusive of all commodity groups and systems

18. Metric Team Roles