An Analysis of the Potential Impacts of Ashton Carter Should-Cost Memorandum on Defense Contracting

Abstract

Ashton Carter, Under Secretary of Defense for Acquisition, Technology, and Logistics (USD[AT&L]), and Robert F. Hale, Under Secretary of Defense (Comptroller/Chief Financial Officer), issued a Joint memorandum on April 22, 2011, titled Joint memorandum on Saving Related to Should-Cost. As iterated in the memorandum, Dr. Carter's goal for the should-cost initiative is to ensure that program managers (PMs) drive productivity improvements into their programs during contract negotiations and throughout program execution and sustainment. This is achievable, according to Dr. Carter, if PMs continuously perform should-cost analysis that scrutinizes every element of government and contractor cost. In addition to the Joint memorandum, Dr. Carter issued a second memorandum on April 22, 2011, for acquisition and logistics professionals, titled Implementation of Will-Cost and Should-Cost Management. This guidance is applicable for all acquisition category (ACAT) I, II, and III programs. The purpose of this research is to examine the potential impacts this and related directives have on the contracting community's ability to request, acquire, audit, and utilize data germane to contract negotiations and management and whether there may be inherent potential conflicts with the commercial item acquisition provisions of Federal Acquisition Regulation (FAR) Part 12 and the contract pricing initiatives of FAR Part 15 to reduce reliance on the Truth in Negotiations Act (TINA) requirements for certified cost and pricing data and cost accounting standards (CAS), and explore strategies for implementing the directive effectively. Additionally, the research will determine the nature and extent of any potential impacts on the Defense Contract Management Agency (DCMA) and Defense Contract Audit Agency (DCAA) at supporting the should-cost effort.