Cost as an Independent Variable (CAIV): Front-End Approaches to Achieve Reduction in Total Ownership Cost

Abstract

During the latter half of the 1980s and throughout much of the 1990s, budget constraints were increasingly tight, resulting in Defense budget reductions (measured in constant dollars); these reductions commenced in FY 1986 and extended through FY 1997 the only increase being FY 1991, corresponding to Operation Desert Storm. In an attempt to squeeze every penny from required resources, DoD leadership emphasized the necessity of controlling cost of new warfighting systems not only the cost of development and production, but also the cost of sustainment. In 1995, Dr. Paul Kaminski, the Under Secretary of Defense for Acquisition and Technology (USDA&T), introduced the term cost as an independent variable (CAIV), in recognition that resources were tight and that weapon system costs lifecycle costs would have to be managed and controlled through tradeoffs that occur during the developmental process.