U.S. Department of Defense FY 2011 Annual Report on Cost Assessment Activities (OSD-CAPE) [Acquisition]

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So if you’ve never heard of OSD-Cost Assessment & Program Evaluation (CAPE) before here is their introduction:

“The office of CAPE provides independent analysis and advice to the Secretary of Defense and other senior officials on a wide range of issues concerning

  1. cost estimation and cost analysis for major Department of Defense (DoD) acquisition programs (both Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) programs);
  2. the DoD Planning, Programming, Budgeting, and Execution (PPBE) system;
  3. resource decisions relating to military requirements;
  4. analysis of alternatives to ensure that DoD considers the full range of program and non-materiel solutions;
  5. evaluations of alternative military force structure, plans, and systems; and
  6. the development of improved analytical skills and competencies within the cost assessment and program evaluation workforce of the Department.

This report is concerned with the first topic—cost estimation and cost analysis.”  I’ve provided a few pointed excerpts I found throughout the FY 2011 Annual Report on Cost Assessment Activities from OSD-CAPE.

Interesting Tidbits:

“The Materiel Solution Analysis phase presents the first substantial opportunity to influence design through trade-off studies that balance requirements, performance, technology choices, schedule, and cost considerations. The CAPE independent cost estimate is now an important element of this process.  For MAIS programs, due to resource constraints, OSD CAPE involvement in cost estimates has been limited to those programs that experience a “Critical Change,” as defined in statute (described in Appendix C), when the USD(AT&L) is the MDA. In addition, cost reporting for the MAIS programs currently is poor, and both quality and compliance need to be improved. There remains much work to be done to improve the management and preparation of cost estimates for the approximately 46 MAIS and pre-MAIS programs now in the DoD portfolio.

“Similarly, OSD CAPE had only limited involvement in cost estimates prepared for major defense agency acquisition programs this year. For example, the Missile Defense Agency remains exempt from DoD acquisition regulations. Therefore, CAPE does not normally prepare independent cost estimates for the Missile Defense Agency’s major acquisition programs.”

Status of Major Programs (page 19-21)

LCS Comments:

“CAPE prepared an independent cost estimate for the Littoral Combat Ship (LCS) program in support of the Milestone B DAB review held on April 1, 2011. CAPE did not concur with the draft LCS Acquisition Program Baseline (APB) or the Acquisition Decision Memorandum (ADM). These documents were subsequently approved by the MDA. The ADM directed the Navy to fund the program to the Service Cost Position, which CAPE argued would result in insufficient funding in FY 2016. This in turn would have an adverse impact on the average unit procurement cost and run the risk of requiring additional resources to complete the ship builds. Also, CAPE recommended that the LCS Mission Module program, which provides tailored warfighting capability to the LCS seaframes, should be established as distinct subprograms for each mission area in order to more readily assess unit cost metrics and track cost performance.”

It is extremely important to understand how the Navy Budget is developed.

DoD Critical Unit Cost (Nunn-McCurdy) Breaches in FY 2011 (Table 2, page 24; page B-1 for severity levels):

  • Excalibur (US Army)
  • Chemical Demilitarization-Assembled Chemical Weapons Alternatives (DoD)
  • Global Hawk (US Air Force)

List of the Cost Analysis Organizations in DoD (Appendix A):

Independent Cost Assessment Organizations (4)

  • OSD – Deputy Director for Cost Assessment
  • Army – Deputy Assistant Secretary of the Army for Cost and Economics
  • Navy – Naval Center for Cost Analysis
  • Air Force – Air Force Cost Analysis Agency

Additional Field-Level Cost Organizations and Activities

U.S. Army

  • TACOM Life Cycle Management Command (LCMC)
  • Aviation and Missile Life Cycle Management Command (AMCOM)
  • CECOM Life Cycle Management Command (LCMC)

U.S. Navy

  • Naval Air Systems Command (NAVAIR)
  • Naval Sea Systems Command (NAVSEA)
  • Naval Surface Warfare Center

U.S. Air Force

  • Electronic Systems Center (ESC)
  • Air Force Space Command, Space and Missile Center (SMC)
  • Aeronautical Systems Center (ASC)

Other

  • National Reconnaissance Office (NRO) Cost Analysis Improvement Group

[via OSD-CAPE]

*need Abbreviation or Acronym help?

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