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O&S costs are often underestimated, especially in early phases

• Over time, constant-dollar estimates sometimes double or triple.
• Information is usually initially extrapolated from data for previous systems; later, experience with actual, fielded systems improves the data on which estimates are based.

Many newer systems are not meeting reliability and availability goals

• Fewer systems are meeting their reliability and availability goals when tested.
• This reflects a declining trend in the reliability and suitability of recently tested systems compared with those tested decades ago.
• All this affects the ultimate cost of O&S.

CAPE's O&S cost workload and resources are mismatched, making it difficult to do all it has been tasked to do

• Legislation has, at various times, established or added to what CAPE is supposed to accomplish. Staffing and related resources have not kept pace.
• Not all the information required to do these assessments is readily available to CAPE. This includes information held in various service systems. Data on contractor costs are also lacking. And CAPE needs more access to subject-matter expertise in many areas.
• As a result of such resource constraints, CAPE is not able to fully accomplish some of its duties.

The Weapon System Acquisition Reform Act of 2009 established the Office of Cost Assessment and Program Evaluation (CAPE) in the Office of the Secretary of Defense and mandated a broad set of cost analysis duties, including conducting independent cost estimates (ICEs) and independent cost assessments (ICAs) for major defense acquisition programs at key acquisition milestones. Subsequent laws have mandated additional duties, especially related to program operating and support (O&S) costs, including requirements to conduct or approve life-cycle cost estimates early in acquisition, identify risk drivers in estimates at milestone decisions, and examine alternatives that may reduce O&S costs. The authors assessed the cost analysis requirements for O&S costs by reviewing relevant laws and U.S. Department of Defense (DoD) guidance; assessed the resources available to conduct the analyses, including numbers of cost-estimating personnel, the data typically available to inform cost analyses, and cost-estimating processes and timelines; interviewed government and industry subject-matter experts to understand past and current DoD cost-analysis activities; reviewed the literature; and developed recommendations to improve weapon system O&S cost analysis during the acquisition phase. The authors found that CAPE lacks sufficient personnel and data to perform all the cost activities mandated by law or to do them with rigor. Recommendations include steps to match CAPE personnel levels with the workload and provide cost analysts access to the relevant data, including expertise in product-support activities, needed to inform cost estimates.

• Chapter One

  The U.S. Department of Defense Cost Analysis Ecosystem and the Office of Cost Assessment and Program Eval

• Chapter Two

  Legal Requirements for CAPE O&S Cost Activities

• Chapter Three

  CAPE Operating and Support Cost-Estimating Activities, Workload, and Processes

• Chapter Four

  CAPE Resources for O&S Cost Activities

• Chapter Five

  Assessment of CAPE's Compliance with Recent Laws Regarding O&S Cost- Estimating Activities

• Chapter Six

  Recommendations for Meeting CAPE's Statutory Responsibilities for O&S Cost Analysis

• Chapter Seven

  Recommendations for Improving O&S Outcomes in DoD

• Appendix A

  O&S Cost Estimates in Selected Acquisition Reports

• Appendix B

  Visibility and Management of Operating and Support Costs Systems

• Appendix C

  Synopsis of CAPE's Organizational Predecessors, Role, and Functions