Sign In
  • Question

    What is the definition of and differences between Acquisition O&M costs and O&S costs as it relates to the APB?


    Answer

    You can find the lifecycle cost composition at https://acc.dau.mil/CommunityBrowser.aspx?id=294481. Operations and Maintenance (O&M) costs are only one portion of Operations and Support (O&S) costs. O&S costs include O&M costs and Military Personnel (MILPERS) costs, but not disposal costs.
     
    I have also included some language below from the 2007 O&S Cost Estimating Guide, to help further define O&S costs for a more detailed discussion. This guide can be found at https://acc.dau.mil/adl/en-US/188404/file/32396/O_S_Cost_Estimating_Guide_Oct_2007.pdf
     
    O&S. Consists of sustainment costs incurred from the initial system deployment through the end of system operations. Includes all costs of operating, maintaining, and supporting a fielded system. Specifically, this consists of the costs (organic and contractor) of personnel, equipment, supplies, software, and services associated with operating, modifying, maintaining, supplying, training, and supporting a system in the DoD inventory. May include interim contractor support when it is outside the scope of the production program and the acquisition program baseline1. O&S costs include costs directly and indirectly attributable to the system (i.e., costs that would not occur if the system did not exist), regardless of funding source or management control. Direct costs refer to the resources immediately associated with the system or its operating unit. Indirect costs refer to the resources that provide indirect support to the system’s manpower or facilities. For example, the pay and allowances (reflected in composite standard rates) for a unit-level maintenance technician would be treated as a direct cost, but the (possibly allocated) cost of medical support for the same technician would be an indirect cost.
     
    O&S costs are specifically included in the CAIV process. O&S cost objectives may be established and included in the Acquisition Program Baseline (APB) at program initiation, and updated at each subsequent milestone review or program restructuring. The O&S cost goal typically would be an annual cost per deployable unit (e.g., battalion or squadron) or individual system (e.g., ship or missile). In some cases, O&S goals could be established in non-dollar terms (such as manpower requirements, or reliability and maintainability objectives). Further information on the setting of cost goals for the Acquisition Program Baseline may be found in the Defense Acquisition Guidebook (ref c), Chapter 2. In addition, O&S costs are a significant element in CAIV trade-off studies. 
     

    Open full Question Details