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Operating and Support Costs (O&S)

ABUS 054

DAU GLOSSARY DEFINITION

A Life Cycle Cost (LCC) cost category that includes all personnel, equipment, supplies, software, and services, including contract support, associated with operating, modifying, maintaining, supplying, training, and supporting a defense acquisition program in the DoD inventory. This includes costs directly and indirectly attributable to the specific defense program; i.e., costs that would not occur if the program did not exist, such as mission personnel, unit level consumption, fuel and energy resources, intermediate level maintenance, depot maintenance, contractor support, sustaining support, and indirect support. These activities are not bound to a life cycle phase or appropriation category.

Alternate Definition
  • 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, and otherwise supporting a system in the DoD inventory.
    (Source: OSD CAPE Cost Estimating Guide: http://www.cape.osd.mil/files/O&S_Cost-Estimating Guide Sept 2020.pdf)
     
  • The Operations and Support phase of the life cycle in a Department of Defense (DoD) system begins with the initial system utilization and lasts until the final system ceases operations. Operating and Support (O&S) costs are the costs of sustainment incurred from the initial system deployment through the end of system’s useful life. 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. O&S costs can account for a majority of the Life Cycle Costs (LCC) for a program, especially given the longevity and potential extended lifespans for many systems.
    (Source: OSD Operating and Support Cost Management Guide. https://acc.dau.mil/adl/en-US/738996/file/81700/OS Cost Guidebook - February 2016.pdf)
General Information

The DoD Operating and Support (O&S) costs are composed of the following five lower-level cost element structure (CES) areas:

  1. Unit-Level Manpower
    • Operations Manpower
    • Unit-Level Maintenance Manpower
    • Other Unit-Level Manpower
  2. Unit Operations
    • Energy (Direct Fuel, Electricity, etc.)
    • Training Munitions and Expendable Stores
    • Support Services
    • Temporary Duty (TDY) Travel
    • Second Destination Transportation
  3. Maintenance
    • Consumables
    • Depot Level Reparables
    • Intermediate Maintenance (External to Unit-Level)
    • Depot Maintenance
  4. Sustaining Support
    • System-Specific Training
    • Support Equipment Replacement and Repair
    • Sustaining/Systems Engineering
    • Program Management
    • Data and Technical Publications
    • Simulator Operations and Repair
    • Other Sustaining Support
  5. Continuing System Improvement
    • Hardware Modifications
    • Software Maintenance

 ** Please note that since September 2020, the Indirect Costs are no longer considered a separate element of the O&S CES. 

The demilitarization and disposal (D&D) costs of DoD systems are addressed as a separate cost estimate and are often associated with the O&S phase, even though those costs are truly different.  The D&D costs associated with the tasks or actions for residual materials resulting from DEMIL (Demilitarization) or disposition operations at the end of a program service-life.  Demilitarization (DEMIL) is the act of eliminating the functional capabilities and inherent military design features from DoD property (e.g., electronics, ammunition, explosives, aircraft, vessels) by cutting, crushing, shredding, melting, and burning. [Note: Qualified personnel and special tools and equipment may be required.]
 

The DoD Product Support Managers (PSMs) and Life Cycle Logisticians (LCLs) have a critical role in the Disposal phase process.  As such, D&D costs may be estimated and presented using the following categories, subject to tailoring for the circumstances unique to each program:

  • Removal from Active Service
  • Demilitarization
  • Removal and Disposal of Hazardous Materials
  • Reclamation of Parts
  • Storage Final Disposal or Salvage 
  • Transportation to Disposal location