Cost As an Independent Variable

Abstract

Reduction in Total Ownership Costs (R-TOC) is the current initiative to manage costs over the entire life of a weapon system. Cost as an Independent Variable (CAIV) is the front-end focus of R-TOC. CAIV is the collection of practices, process, and tools by which system developers and other stakeholders control Lifecycle Costs (LCC). CAIV includes setting affordability goals, technical versus cost tradeoffs, cost and performance architectures that include production and sustainment costs, and a range of specific practices. Recent research into R-TOC suggests that CAIV efforts may not be taking full advantage of new JROC/JCIDS processes nor engendering full leadership support to reduce O&S costs. The Program Manager (PM) is responsible for developing and managing a TOC plan with input from key stakeholders such as the sponsor and other users, the Joint Requirements Oversight Council (JROC), and DoD Component and OSD leadership. Early incentives to encourage focus on affordability, in conjunction with emphasis on warfighting capability, will be examined. This study will examine the critical issues associated with understanding and implementing CAIV and provide recommendations for PMs and other TOC stakeholders.