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O&S Cost Reporting Tools

ALCL 177

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.

General Information

Overview of O&S Cost Reporting Tools

The primary focus of this article is the broad range of O&S data and various audiences associated with applicable tabular/graphical illustrations of that data. For example, O&S data includes tracking of consumables and parts through all user-level operations and maintenance activities at forward deployed world-wide locations for each program or system of record. The varied audiences (hence users and consumers) include: (1) individual operational and maintenance locations; (2) intermediary personnel ensuring trained, equipped, supported, mission capable assets, etc. are available; (3) personnel located at the corresponding DoD and contractor repair depots and suppliers (oil, fuel, and other consumables) are cost-effectively available to meet demands; (4) properly trained warfighting Service and DoD personnel that are forecasting, predicting, measuring, etc. the entire Service and DoD O&S infrastructure and mission availability requirements; and finally (5) The Congress that appropriates funds to the Service and DoD organizations to meet their military readiness objectives.

The logistician’s role is continuously evolving to support all audiences and as such they must ensure that insightful O&S cost data and tabular/graphical illustrations are applicable, accurate, and timely for each audience. This is also in concert with the 2018 National Defense Authorization Act (NDAA) that called for increased use of data analytics to improve acquisition outcomes and promote collaboration across military Services and agencies internal and external to DoD. These data analytics tools provide enhanced analysis across the vast depth and breadth of O&S data currently available. The DoD is highly leveraging Advana (Advancing Analytics) as its technology platform, which, in addition to housing a collection of enterprise data, is pushing beyond simply being a data warehouse. It is arming military and business decision makers across the DoD with decision support analytics, data management and data science tools, and associated support services.

DoD O&S Cost Storage and Reporting Repositories

The DoD Components use a wide range of data sources to develop the O&S portion of a system Life Cycle Cost Estimate (LCCE). Primary sources of historical O&S costs captured under each DoD Component Visibility and Management of Operating and Support Costs (VAMOSC) construct are:

The US Army OSMIS database is the historical record in cost per mile or cost per hour of all major Army weapons systems. The US Navy VAMOSC provides the direct O&S costs of Navy and Marine Corps weapons systems and related performance information, such as flying hour metrics, steaming hours, age of aircraft, and fuel usage. The US Air Force TOC system provides routine, timely visibility into Air Force costs, including major Air Force systems, Major Commands, Air Force appropriations, cost, logistical, and programmatic data.

Each DoD Component O&S data collection, analysis, reconciliation, and reporting system and processes are often unique and thus contain inherent anomalies and deficiencies. As such, analysts using the databases should become familiar with the data limitations to correctly interpret trends or results of data analysis.

The OSD CAPE is also managing an Enterprise Visibility and Management of Operating and Support Costs (EVAMOSC) data platform that collects and reports actual operating and support (O&S) cost data for all major weapon systems.

Table 1 below is an example of four years of historical O&S data for a representative Navy ship system from VAMOSC.  The table provides some lower-level visibility across all O&S Cost elements.  A breakout of O&S Cost elements is displayed in the top-portion of Table 1 and some of the non-cost data (e.g., quantity of ships, # officer/enlisted manpower levels, gallons of fuel, steaming hours, etc.) are captured in the bottom portion.  The Cost per Ship per Year and the Cost per Steaming Hour values are calculated as displayed in Table 1.  As applicable to a particular system, the VAMOSC data can range from very detailed levels (i.e., five-six indentures down) to more summary levels (e.g., just 1,0, 2.0, 3.0, ...).  The data in Table 1 represents the entire ship class, but some individual ships may be the primary contributors to the differences across the four years and thus a separate inquiry for an individual ship can also be displayed.  It should be noted that both OSMIS and AFTOC can provide similar data breakouts unique for its platforms and systems.

Table 1. Example of Navy VAMOSC Ship Data

Using the 4-year average data from Table 1, a Pareto curve display of the O&S Cost 'drivers' is presented in Figure 1.  The top six Cost Drivers in Figure 1 account for nearly 85% of the total annual cost.  As such, they serve as potential areas for to further analysis to determine if any corrective actions may be needed to minimize those O&S Cost areas through applicable cost reduction initiatives. 

Figure 1. O&S Cost Drivers

Using the same data from Table 1, a 4-year top-level O&S Cost element trend of the example Ship Class is shown in Figure 2.  This provides another view of the historical data to provide insights for forecasting out-year O&S Costs and also serve as historical data and basis for estimating another future similar ship system.  Figure 2 graphically displays a significant reduction in O&S Cost element 5.0 (Continuing System Improvements) over the 4-year period that may be contributing to reducing overall annual O&S Cost for the Ship Class.

Figure 2. VAMOSC Ship Class Trend

Table 1 and Figures 1 and 2 are several representative examples of O&S Cost reporting that would be useful for most logisticians.  They are paricularly relevant for creating and updating the Life Cycle Sustainment Plan (LCSP) for a system.  In addition, they assist the system Program Manager (PM) and Product Support Manager (PSM) in communicating the status of O&S Cost projections across a variety of required deliverables and audiences.

O&S Data Sources

Besides the VAMOSC, OSMIS, and AFTOC repositories already mentioned, there are several other program specific documents used for informing the O&S Cost estimate include:

Life cycle logistics professionals support a wide range of analyses/assessments of O&S data. These include system design parameters, such as reliability, diagnostics, fuel efficiency, and maximum speed. Typically, key design factors are CDD requirements and include those derived from proposal evaluation criteria, contract requirements, or lower-level cost allocations. A logistician also supports a variety of non-design parameters, such as core sustainment capabilities associated with depot maintenance, supply chain performance, and transportation.

The system Program Manager (PM) and the responsible PSM should treat any O&S cost drivers that fall outside of the program office control as assumptions or constraints to which they should respond to through engineering and sustainment planning. These assumptions and constraints, with particular attention on how they impact the LCCE and especially the O&S cost portion, should be well-documented.  In addition, they should be consistently promulgated across all system documentation to include the LCSP.

Possessing thorough insights into your system capabilities, operational and maintenance plans, mission scenarios, data products, etc. shall enable meaningful metrics analysis and reporting across applicable O&S cost areas. There are often different audiences that make decisions across one or more O&S cost areas.

Summary

The reporting of O&S Cost data is very important to the accurate planning and execution of a DoD system (or portfolio of systems).  Therefore, life cycle logisticians need to be proactive and vigilant in teaming with other acquisition functional communities -- including but not limited to business, financial management, cost estimating, program management, and systems engineering -- to ensure that logistics and product support-driven parameters are succinctly captured.  This is especially important given the majority (e.g., greater than 70%) of DoD system life cycle costs are very often associated with O&S costs.