DON Acquisition Governance (Gate Reviews) Establishing a Post-IOC Sustainment Review Logistics...

DON Acquisition Governance (Gate Reviews)Establishing a Post-IOC Sustainment Review

Logistics Functional IPT30 April 2010

DON has established 10 Gate Reviews, across the span of systems Acquisition. The purpose of each is governance of specification, design,

development, and planned systems introduction. Gate Reviews align

performance capability requirements to Acquisition execution and improve senior leadership decision-making by providing a

comprehensive understanding of risks, program health, and life-cycle cost.

Operations & Support

IOCBA

Engineering & ManufacturingDevelopment

Production & Deployment

Operations & Support

C

MaterielSolutionAnalysis

TechnologyDevelopment

FRPDecisionReview

FOC

Materiel DevelopmentDecision

Life CycleSustainment

Disposal

LRIP Full-Rate Prod & Deployment

Integrated System Design

System Capability & Manufacturing Process

Demonstration

Post PDRAssessment

JCIDS Process

CBA

TD PDM Post CDRAssessment

MS CPDM

ITR ASR IBRPDR

ILA

SRR SFR PDRWSARA

CDR TRR SVR / FCA / PRR

OTRR PCA ISR

ILA

ILA

Technical Reviews

Logistics Reviews

Program Initiation at Milestone B

ILAILA

1 2 3 4

ICD AoA SDS RFP

6

Sustainment

5 6 6 6 6

CDDCONOPS

PostIBR

Post CDR

CPD Pre FRP DR

Legend:

GateChair:CNO/CMC

GateChair:ASN

(RDA)

DON Gate Review Alignment Version 2.0 - SECNAVINST 5000.2E

Tech Review

3

GATE 6 SUFFICIENCY REVIEW (SUSTAINMENT)

PROGRAM NAMEACAT: ____

Joint Designation: ___

Program Manager Name; PM CodeRequirements Officer Name; RS Code

Briefer Name; CodeBriefer Name; Code

Classified by:Reason:Decl on:

Review Date MM/DD/YYYY

CLASSIFICATION (U)

CLASSIFICATION (U)

Standard template formatfor all 10 “Gate Reviews”Standard template formatfor all 10 “Gate Reviews”

Purpose

• Decisions Desired– Assess sustainment effectiveness and affordability at IOC +

NLT 4 years– Resolve initial operational command sustainment issues

(events and circumstances may trigger timing of Gate)– Address need for program change, to improve systems

sustainment and affordability

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Sustainment Gate Membership

Gate 6 Sustainment Membership

Purpose:

Readiness & Sustainability Assessment, Assess Affordability

Briefer:

PM and RO

Co-Chair:ASN(RD&A), CNO/CMC Principal:VCNO/ACMC, USFF, MARFOR, CNI, NAVSUP/LOGCOM, ASN(FM&C), N00N, N8/DC, P&R/DC, CD&I, N1/DC, M&RA, N2/N6, N3/N5/DC, PP&O, N4/DC, I&L, DON CIO, PDASN, Warfighter Enterprise Lead, SYSCOM, PEO As required:CNR, DC, AvnAdvisory:ASN(RD&A)CHSENG, DASNs, N80, N81, N82, N81D, N091, USFF(N8), HQMC(CL, PA&E), OGC, DASN(FMB), DASN(C&E), SYSCOM Cost Director, Resource Sponsor, DirNIPO, OPPA

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Sustainment Gate Entry criteria

1. Achieved Full Rate Production decision 2. Achieved System IOC3. Completed post-IOC Supportability Assessment (ILA)4. Updated Program cost estimates (CAPE protocols) 5. Updated Program LCSP, LRFS, TOC reduction initiatives

Sustainment Gate Exit criteria1.Concur with recommendations to resolve asset and mission readiness issues or shortfalls2. Concur with TOC reduction opportunities and investment 3. Progress towards CPD capability performance4. Concur with Program Health assessment

Sustainment Gate Entrance/Exit Criteria

1. IOC/FOC Schedule and Definitions2. Review of LCSP programmatics, costs, and affordability in context of allocated

resources (i.e. LCSP/LRFS execution)3. Results of Independent Logistics Assessment (ILA) 4. CPD Parameter Metric Measurement5. Technical Health6. T&E Major Deficiencies and Resolutions7. Budget and Funding 8. Threat and Capability Review9. Summary of CONOPS, as being employed10. Configuration Steering Board (CSB) 11. Evaluation of TOC Reduction, Initiatives, and Investment 12. Extended SCP-related analysis, in accordance with NCCA policy and CAPE

protocols13. Major cost drivers by KPP/KSA impact, to include specific cost reduction

strategies14. Interdependencies15. Schedule16. Significant Risks 17. Program Health18. OSD Sustainment “Quad” Chart

Briefing Content

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Business Model Details

• Supportability Analyses• Level of Repair• Manpower• Analysis and Reporting of Sustainment/Readiness/Cost Performance

• Sustainment Contracts• PBL Strategy and evaluation• Other Government• Contractor• Product Data Ownership/Usage

• LCSP Integrated Schedule/Milestones

Life Cycle Sustainment Plan

Page 1 of 3

Note: The content on this slide will likely require multiple slides to address.

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

• Manpower, Personnel, and Training

• Product and Technical Data

• Maintenance Strategy• Levels of Repair

• Facilities and Infrastructure

• Logistics Footprint• Describe as functions of systems design interface (including diagnostics),

maintenance strategy, supply and transportation, manpower and training, etc.

• Safety and Environmental Compliance

Page 2 of 3



PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)


• Sustainment Program Management – Assimilation within broader logistics infrastructures– LCSP adjusted to “replaced systems” sustainment planning

• Supply Management and Transportation

• Technology Refreshment, Obsolescence Management, and Corrosion Prevention

• Modernization opportunities (investment)

Page 3 of 3


PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Independent Logistics Assessment Item

Rating Rationale

ILS Management G

Budgeting and Funding G

Maintenance Planning/Execution R No Maintenance Plan

Design Interface Y

RAM Maturity Growth G

Supply Support Y PBL Strategy ineffective

Support and Common Equipment G

Human Systems Integration (MPT&E) G

Facilities & Platform Integration G

Safety & Environment G

Product/Technical Data G

Computer Resources & SW Support Y Integration issues with existing database structure

PHS&T G

Note: Need to provide mitigation plans in backup for all items rated Yellow or Red.

Legend

Supports Activities

Some Gaps ExistSignificant Gaps

Exist

Results of Supportability Assessment (ILA)

Pre-decisional – Not for Release

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Life Cycle Sustainment Metrics to include KPPs, KSAs, and target goals. Separate slides follow, one per parameter not at threshold value.

CPD Parameter Metric Measurement

Pre-decisional – Not for Release

KPP/KSA/Other Attribute

Threshold Performance ObjectiveStatus/Basis

KPP T

KPP T

KPP T

KSA T

KSA T

Other T

Improving Constant Degrading

Legend

Meets Objective

Meets Threshold

Below Threshold

Basis Legend

E = Estimated | C = Calculated T = Test Data | L = Legacy

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Not justSustainmentKPP/KSAs

Not justSustainmentKPP/KSAs

Program Funding & Quantities

($ in Millions / Then Year)Prior Years

Current Year

FYDP Yr 1

FYDP Yr 2

FYDP Yr 3

FYDP Yr 4

FYDP Yr 5

FYDP Yr 6

FYDP Yr 1- 6 To Comp Total

RDT&ECurrent $ (PB 08) 5.0 1.0 2.0 3.0 5.0 6.0 7.0 8.0 31.0 10.0 47.0Required $ 0.0 1.0 2.0 2.0 2.0 3.0 4.0 5.0 18.0 9.0 28.0 Delta $ (Current - Required) 5.0 0.0 0.0 1.0 3.0 3.0 3.0 3.0 13.0 1.0 19.0

PROCUREMENTCurrent $ (PB 08) 5.0 1.0 2.0 3.0 5.0 6.0 7.0 8.0 31.0 10.0 47.0Required $ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.0 9.0 Delta $ (Current - Required) 5.0 1.0 2.0 3.0 5.0 6.0 7.0 8.0 31.0 1.0 38.0

O&MCurrent $ (PB 08) 2.0 3.0 4.0 5.0 7.0 8.0 9.0 10.0 43.0 5.0 53.0Required $ 1.0 3.0 5.0 2.0 9.0 2.0 6.0 6.0 30.0 2.0 36.0 Delta $ (Current - Required) 1.0 0.0 (1.0) 3.0 (2.0) 6.0 3.0 4.0 13.0 3.0 17.0

MPCurrent $ (PB 08) 4.0 5.0 6.0 7.0 9.0 10.0 11.0 12.0 55.0 15.0 79.0Required $ 5.0 6.0 0.0 6.0 11.0 14.0 12.0 14.0 57.0 17.0 85.0 Delta $ (Current - Required) (1.0) (1.0) 6.0 1.0 (2.0) (4.0) (1.0) (2.0) (2.0) (2.0) (6.0)

MILCONCurrent $ (PB 08) 2.0 3.0 4.0 5.0 7.0 8.0 9.0 10.0 43.0 20.0 68.0Required $ 3.0 4.0 5.0 6.0 4.0 5.0 6.0 7.0 33.0 15.0 55.0 Delta $ (Current - Required) (1.0) (1.0) (1.0) (1.0) 3.0 3.0 3.0 3.0 10.0 5.0 13.0

TOTALCurrent $ (PB 08) 18.0 13.0 18.0 23.0 33.0 38.0 43.0 48.0 203.0 60.0 294.0Required $ 9.0 14.0 12.0 16.0 26.0 24.0 28.0 32.0 138.0 52.0 213.0 Delta $ (Current - Required) 9.0 (1.0) 6.0 7.0 7.0 14.0 15.0 16.0 65.0 8.0 81.0TOC Objective $ 17.5 13.2 17.0 21.2 31.8 35.5 40.0 44.8 190.3 49.0 270.0 Delta $ (TOC Objective - Current) (0.5) 0.2 (1.0) (1.8) (1.2) (2.5) (3.0) (3.2) (12.7) (11.0) (24.0)

QUANTITIESCurrent (PB 08) 31 25 34 43 61 70 79 88 375.0 0 431Required Qty 18 27 22 30 50 45 52 59 258.0 0 303 Delta Qty (Current - Required) 13 (2) 12 13 11 25 27 29 117 0 128

Program Budget versus Total Ownership Cost Estimate

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

LRFS (cumulative appropriations) FY FY FY FY FY FY FY TOTAL DELTA % FUNDEDMaintenance Required 0.0 0.0 #DIV/0!

Funded 0.0Manpower & Personnel Required 0.0 0.0 #DIV/0!

Funded 0.0Supply Support Required 0.0 0.0 #DIV/0!

Funded 0.0Support Equipment Required 0.0 0.0 #DIV/0!

Funded 0.0Technical Data Required 0.0 0.0 #DIV/0!

Funded 0.0Training & Training Support Required 0.0 0.0 #DIV/0!

Funded 0.0Computer Resources Required 0.0 0.0 #DIV/0!

Funded 0.0Facilities Required 0.0 0.0 #DIV/0!

Funded 0.0ILS Program Management Required 0.0 0.0 #DIV/0!

Funded 0.0Transportation Required 0.0 0.0 #DIV/0!

Funded 0.0Supportability Analysis Required 0.0 0.0 #DIV/0!

Funded 0.0

TOTAL Required 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 #DIV/0!Funded 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

DELTA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

LRFS is the LCSP’s requirements-to-budget baseline for life-cycle planning/execution of systems Sustainment

Life Cycle Sustainment Plan (LCSP) Logistics Requirements and Funding Summary (LRFS)

Tailor template to program’s actual LRFS categories

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

## $

## $

## $

## $

## $

## $

## $RDT&E

A B CIOC FOC

$$ FYDP $$

LRIP

Remaining LC FYs $$ by Year

FRP – Qty/Period

Note any life-cycle assumption changes

FY# FY## FY## FY## FY## FY##

PROCUREMENT

MILCONMPN

OM

MP

INITIAL SCP

Prior Yrs Spent

LASTEST SCP ESTIMATE

$$ M

/TY

New “Service Cost Position” Serves as a Baseline for “TOC Objective” Target Line

LATEST TOC OBJECTIVE

Updated TOC ProfilePROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

TOTAL OWNERSHIP COST ESTIMATING

Event Rating Rationale

Post-IOC cost estimates. Includes a projection of the TOC Objective versus SCP baseline, substantiated in part by assessed fielded-systems performance and sustainment related expenditure to date.

G

Post-IOC Cost Estimating

Notes: Any pertinent information that cannot be readily gathered from the data table above can be included in this text box. It provides an easy method of conveying more details than the data table may allow.

Legend

Meets CriteriaPartially Meets

CriteriaDoes Not Meet

Criteria

Program Planning / ExecutionPROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

Sustainment Item Rating Rationale

Sustainment program logistically supports all system performance capabilities introduced to date, such that KPP/KSA capability parameters are assessed to meet threshold levels.

GSustainment program logistically supports all system capabilities

introduced to date.

The Sustainment Program is executing per the LCSP/LRFS.

G

Sustainment related performance metrics are measured, assessed, reported, and used to revise Sustainment Program planning and execution.

G

Supply Chain Management to include a program of DMSMS is operating effectively to support operations and maintenance.

Y

SUSTAINMENT

Program Planning / Execution

Legend



Criteria

Sustainment and Logistics Activities Page 1 of 2

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

Sustainment Item Rating Rationale

Maintenance is operating to specified levels of repair and is supporting operations.

Y

The training system is operating to plan, is supporting the manpower KPP threshold (if applicable), and is supporting operations and maintenance.

Y

Facilities are in place and environmentally ready to support scheduled systems fielding, deployment, operations, and maintenance.

G

SUSTAINMENT

Program Planning / Execution

Sustainment and Logistics Activities

Legend



Criteria

Page 2 of 2

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

Describe concept of employment of the capability, as now employed

• Mission area contribution to the Joint force including– Continued alignment with OSD capability guidance/vision and

Navy/Marine Corps strategies

• Operational unit employment (numbers/organizations)• Types and quantities of assets currently fielded• Overview of logistics and sustainment operations

– Fielding – Manning – Maintenance Management and Logistics IT– Supply Management (to include IUID)– Transportation

Summary of CONOPSas Employed

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Solid denotes current systemDash denotes future system

Arrow to Program XYZ denotes supports Program XYZArrow from Program XYZ denotes Program XYZ supportsIndicates program are interdependent

Interdependencies Programs, plus major public/private

Sustainment infrastructure Interdependencies

No known issues affecting inter-related programs

Resolvable interface issues affecting programs

Unresolvable interface issues affecting programs

Program H

Program I (upgrades)

Program J

Program K

Program L

Program M

Program A

Program B

Program C

Program D

Program E

Program F

Program G

Program XYZ

Program XYZ

C S P

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

DRAFT Last ModifiedMarch 18, 2010

Critical CriteriaX

Performer Summary◊

Legend

PROGAM HEALTH (PoPS)Program Name

68.55/100

Program Requirements

8.00/8

Program Resources18.41/25

Program Planning / Execution34.14/59

External Influencers

8.00/8

Parameter Status8.00/8

Scope Evolution

CONOPS

Budget and Planning8.45/13

Manning9.96/12

Acquisition Management

Industry/Company

Assessment

Total Ownership Cost Estimating

3.00/10

Test and Evaluation

1.66/2

Technical Maturity0.96/2

Sustainment8.02/16

X

Software4.15/5

Contract Planning and Execution

2.88/9

◊ ◊

Government Program Office Performance

7.47/9

Technology Protection

6.00/6

Fit in Vision

Program Advocacy

Interdependencies

8.00/8

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

PoPS “Green” state for each of 7 criteria under the sustainment metric at the Sustainment Gate

Sustainment program logistically supports all system performance capabilities introduced to date, such that program technical and cost Key Performance Parameter (KPP)/Key System Attribute (KSA) capability parameters are assessed to be performing to (at minimum) threshold levels.

The Sustainment Program is executing per the LCSP/LRFS and both planning and execution is rapidly adjusting to meet emerging sustainment needs due to changed operational environment, optempo, or program risk or funding. Revised Sustainment Program execution retains levels of systems readiness without adverse impact to sustainment costs.

Sustainment related metrics are being measured, assessed, reported, used to revise the LCSP/LRFS, and have clearly driven Sustainment Program execution; especially in terms of timely corrective actions.

Supply Management and a program of Diminishing Manufacturing Sources Material Shortages (DMSMS) is operating effectively across contractor and organic sources. No supply or obsolescence issues are adversely affecting systems KPP/KSA performance, sustainment, readiness, or ownership cost.

Maintenance is reliability-centered and is operating to specified levels of repair. Maintenance operations are being adjusted to OPTEMPO changes and supported by timely and uniform technical data. No adverse impact to systems readiness, KPP/KSA performance, or ownership cost attributed to maintenance activity.

The training system is operating to plan, is supporting the manpower KPP threshold (if applicable), and is effectively adjusting to systems fielding, deployment, and to the needs for operations and maintenance. The training program is supplied timely technical data, which it rapidly adopts towards uniform instruction.

Facilities are in place and environmentally ready to support scheduled systems fielding, deployment, operations, and maintenance. Facilities and environmental analyses continue to ensure that changes in basing, fielding, deployment, OPTEMPO, or related regulations do not affect Sustainment Program cost or systems readiness.

• Key O&S Phase cost drivers and root causes addressed

• Update prior program TOC planning and ongoing execution

• Show execution results in terms of reducing cost toward the TOC Objective

• Proposed investment/modernization, to target the SCP/TOC Objective delta within any span of the O&S phase that is not yet being addressed by a TOC reduction initiative

Evaluation of TOC Reduction, Initiatives, and Investment


PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Department of the Navy

Total Ownership Cost (TOC)Total Ownership Cost (TOC) GuidebookGuidebook28 January 2010

https://acc.dau.mil/CommunityBrowser.aspx?id=350380

“This is the first, limited version of DON's TOC Guidebook. Its focus is guidance for ACAT programs, as they construct and present their TOC related strategy and execution, during all stages of formal life cycle governance. For DON, that means the ten Gate Reviews with associated program health assessments (PoPS).”

Department of the Navy

Total Ownership Cost (TOC)Total Ownership Cost (TOC) GuidebookGuidebook28 January 2010


“This is the first, limited version of DON's TOC Guidebook. Its focus is guidance for ACAT programs, as they construct and present their TOC related strategy and execution, during all stages of formal life cycle governance. For DON, that means the ten Gate Reviews with associated program health assessments (PoPS).”



Gate Review and PoPS Briefing Slides Reference

TOC Guidebook Page #

DON Version 2.0 Gate Reviews

1 2 3 4 56

IBR6

CDR6

CPD6 FRP

DR

6 Sustain-

ment

AoA Proposed Study Guidance

7 X

Total Ownership Cost Estimate

10X X X X X X X X

Total Ownership Cost of Alternatives (AoA results)

12X

TOC Profile for Preferred Alternative

13X

Warfighter Review of AoA Results

14X

Updated TOC Profile 17X X X X X X X X

Total Ownership Cost Drivers

18 X X X X X X X

Cost Estimate versus APB 21 X X X X X X

Logistics Requirement and Funding Summary

22 X X X X X X X

TOC Estimate History (Guidebook only)

23 X X X X X X X

Evaluation of TOC Reduction Planning Initiatives & Investment

31 X

Decisions Reached

Note: Please provide performance against the listed Exit Criteria

Goals/Exit CriteriaApproved/

Not ApprovedAdditional Actions

1. Concur with selected recommendations to resolve asset and mission readiness issues or shortfalls

2. Concur with TOC reduction opportunities

3. Concur with risk assessments

4. Acceptance of CPD capability requirements changes or recommend new or updated capabilities to meet evolving operational capability need

5. Satisfactory review of Program Health

PROGRAM NAME

GATE 6 Sustainment

(CORE)

DATE UPDATED

CLASSIFICATION (U)

CLASSIFICATION (U)

Logistics-related TOC Challenges

• 2-3% O&M and 1.5% Manpower cost growth/year (DoD)• Navy Logistics expends billions yearly ($31B at OPNAV

N4 alone) and must move closer to world-class levels of operational effectiveness, responsiveness, visibility, trust in the supply system, end-to-end IT/communication, and investments, if LCC/TOC is to be substantially reduced.

• The majority of the 2020 Battle Force exists today• 222 of today’s 285 ships still required in 2020, so these platforms

must all achieve their expected service lives

• Need to understand impact of individual ACAT decisions on cumulative TOC, in order to posit the question “What are we willing to pay for new program LCC, given it’s contribution to cumulative future logistics/readiness bill?”

• TOC “mitigation” steps during Development phases• TOC “reduction” steps during Sustainment

Navy’s POM 12 Endorsed TOC Investments

Initiative ProviderInvestment Required

TY

FYDP Savings

TY

Compressed Air Systems Energy Optimization NAVSEA 1.10 62.00

LSD 41 and LSD 49 Condition-Based Maint. Support NAVSEA 0.95 15.33

Strategic Sourcing NAVSUP 32.51 479.45

LCS Water Jet Tunnel Corrosion Prevention NAVSEA 0.76 9.92

2M Gold Disk Development NAVSEA 9.00 41.25

DSCR-Deck Simulating Shock Machine (DSSM) NAVSEA 0.95 27.80

SRA Protrack and Pinpoint Test Routines NAVAIR 3.92 62.60

Quality Based Maintenance Optimization NAVAIR 19.00 263.30

F/A18 GCU SCR DCT NAVAIR 2.43 13.75

Next Generation Laser Cladding System NAVSEA 0.50 4.20

Revise VA Class Drawings NAVSEA 4.20 37.68

Main Propulsion Diesel Engine (MPDE) Training Improvement NAVSEA 7.50 42.50

Event Based Maintenance NAVAIR 20.80 176.00

Automated Data Capture System (ADCS) NAVAIR 2.07 7.50

Electronic Technical Work Document (eTWD) Capability NAVSEA 25.35 168.00

TOTAL ($M) 131.04 1411.28

29

Total Ownership Cost (TOC) Affordability Initiatives Program

5000-policy/ACAT governance/SCP/expanded cost analysisall have raised LCC visibility and decision-weight priority forhigher TOC-valued alternatives. Time now to revive a yearlyprogram to solicit for and screen affordability investments toboost readiness, lower life cycle cost, and leverage proven-reliable/maintainable commercial technology.

SYSCOMs, ACATs, and Providers Proposed Initiatives for POM 12

- 472 TOC initiatives submitted to N4 for rating/ranking - Investment in 15 of $131M are projected to Deliver ~$1.4B savings, over the FYDP - Leadership confident in financial projections and willing to take offset at the bottom line - N4 will now codify TOC investment governance process

30

Total Ownership Cost (TOC)

Good question, Bill.

“By all means talk about "TOC" in the earliest stages of systems develop with new-start programs. But do so in the context of those "actionable" pre-MSB actions and events that manifest early-phase TOC. In programs where most of the major systems development decisions are made, then "TOC" is increasingly synonymous with effort to lower sustainment related cost.”

• Actions that "mitigate" TOC prior to MS-B (JCIDS/R3B + AoA + TLCSM rationale + LCSP/LRFP oversight + Gate Reviews).

• Actions that "reduce" TOC after MS-B (Gate Reviews + Yearly TOC Investment + application of readiness-to-cost analyses).

Axiom: Strongest variables to eventual total program cost are decisions made during the earliest JCIDS/Acquisition phases

+ Axiom: Eventual majority of ACAT total program cost is O&S phase sustainment cost

+ Axiom: LCL is inherently the strongest advocacy for mitigating and reducing majority O&S sustainment cost

+ Axiom: Parts orders take 4 times longer to receive in services than industry, due less to technology and more to culture and leadership

= Paradox: Minority role of LCL, during early JCIDS and Acquisition, is not commensurate with LCL potential impact on the majority of program cost

Future Trends/Final Point LCL Work and Workforce

a) Better integrate insular logistics information systems across Service enterprisesand b) favor for promotion “cross-functional” LCLs, with the intent that they migratetheir sustainment cost-mitigating competency into earliest-phase JCIDS/Acquisitionprocess and program positions. These steps should help c) generate readiness-to-sustainment cost data and analyses, specifically to build cases that ACAT decisionprocesses increasingly find and select optimal life-cycle ownership cost alternatives.

• Sustainment and LCC/TOC are higher priorities throughout– Mutual LCSP/SEP evolution, to ensure JCIDS sustainment capabilities are

integral to systems performance. Specifically, a reliability growth program shall be documented in the SEP and LCSP and briefed at Gate Reviews

– Evident throughout ACAT governance (Gate Reviews)– Evident in an expanded range of program cost analysis (AoA, SCP, etc.)– Evident in expansion of ILAs to a post-IOC timeframe

• The PM shall document a product support strategy, including the RSSP, in the LCSP annex to the AS. The LRFS adjunct to the LCSP (required) relates LCSP execution to programmatic resources.– LCSP briefed at Gates, reviewed by N4 or I&L, approved by MDA (not PM)

• AoA Studies to assess sustainment performance (RAM) and LCC of alternatives

• PM TLCSM responsibility requires all fundamental program decisions heavily weigh those alternatives that are most conducive to system life-cycle sustainment/affordability– AS and LCSP must set the means to evaluate/use standard parts/equipment– Data Management Strategy (DMS) must integrate with life-cycle sustainment

SECNAVINST 5000.2E Final Draft: Acquisition Logistics and TOC Highlights

DON Acquisition Governance (Gate Reviews) Establishing a Post-IOC Sustainment Review Logistics...

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