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Life Cycle Logistics

Product Support Business Case Analyses (BCA)

Product Support Business Case Analyses (BCA)

Bill Kobren

Was doing some research the other day on the subject of product support business case analysis statute, policy and guidance. In the interest of knowledge sharing, wanted to pass on a few of the things I found. This compilation of key provisions might prove to be a useful reference for many of you:

 

·         Among other specific requirements, Sec 805 of Public Law 111-84, "National Defense Authorization Act for Fiscal Year 2010," dated October 28, 2009 requires that "a product support manager for a major weapon system shall  conduct appropriate cost analyses to validate the product support strategy, including cost-benefit analyses as outlined in Office of Management and Budget Circular A-94... and...prior to each change in the product support strategy or every five years, whichever occurs first, revalidate any business-case analysis performed in support of the product support strategy."

 

·         Attachment 2 of Directive Type Memorandum (DTM) 10-015 Requirements for Life Cycle Management and Product Support states "requirements for Life Cycle Management and Product Support. The principal duties of the PSM are to...conduct periodic  product support strategy reviews and revalidate the supporting business case analysis prior to each change in the product support strategy or every 5 years, whichever occurs first.”

 

·         Attachment 4 of DTM 10-015 states "the duties of the PSM include....using appropriate analytical tools to determine the preferred product support strategy. Analytical tools can take many forms (analysis of alternatives, supportability analysis, sustainment business case analysis, life cycle impact analysis), dependent upon the stage of the program's life cycle. These analytical tools shall incorporate the use of cost analyses, such as cost-benefit analyses as outlined in Office of Management and Budget Circular A-94, "Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs," October 29, 1992, as well as other appropriate DoD and Service guidance consistent with Public Law 111-84, "National Defense Authorization Act for Fiscal Year 2010," October 28, 2009. These tools are used to help identify the best possible use of available DoD and industry resources at the system, subsystem, and component levels by analyzing all alternatives available to achieve the desired performance outcomes. Additionally, resources required to implement the preferred alternative should be assessed with associated risks. Sensitivity analyses should also be conducted against each of the IPS elements and tracked to determine those integrated product support (IPS) elements where marginal changes could alter the preferred strategy."

 

·         Defense Acquisition Guidebook (DAG) Chapter 5, para 5.1.3.2. Product Support Manager (PSM) states "the day-to-day oversight and management of the product support functions are delegated to a product support manager who is responsible for managing the package of support functions required to field and maintain the readiness and operational capability of major weapon systems, subsystems, and components. This includes all functions related to weapon system readiness including... Using appropriate analytical tools to determine the preferred product support strategy . Analytical tools can take many forms (analysis of alternatives, supportability analysis, sustainment business case analysis, life cycle impact analysis), dependent upon the stage of the programs life cycle. These analytical tools shall incorporate the use of cost analyses, such as cost-benefit analyses as outlined in Office of Management and Budget Circular A-94, "Guidelines and Discount Rates".

 

·         DAG Chapter 5, para 5.2.2. Life-Cycle Costs (LCC) and Product Support Business Case Analysis (BCA) (see also DoD Directive 5000.01 para, E1.1.4, E1.1.17, and E1.1.29). Most importantly DAG para 5.2.2. states that, "the Product Support Business Case Analysis (BCA) is used to assist in identifying the product support strategy that achieves the optimal balance between Warfighter capabilities and affordability. (Other names for a BCA are Economic Analysis, Cost-Benefit Analysis, and Benefit-Cost Analysis. Regardless of the name, is it a structured analytical process that aids decision making in identifying and comparing alternatives by examining the mission and business impacts (both financial and non-financial), risks, and sensitivities.) The PSM should prepare a Product Support BCA for major product support decisions, especially those that result in new or changed resource requirements. The BCA should consider organic and commercial alternatives when determining the optimal support solution (e.g. DLA, TRANSCOM, Service activities and commercial options). Each of the key stakeholders should be informed of the BCA process and support the analysis by providing the information needed to make an informed decision."

 

·         DAG Chapter 5, 5.4.3.2. Activities/Processes (Supportability Analysis section)

 

·         USD(AT&L) 14 Sep 11 memo "Document Streamlining - Life-Cycle Sustainment Plan (LCSP) Outline", para 9.2.1 Product Support Manager (PSM) Roles and Responsibilities, para 10.2 Product Support Element Determination, and  LCSP Annexes ( "Product Support Business Case Analysis (DoD Instruction 5000.02)").

 

·         DoD Product Support Business Case Analysis (BCA) Guidebook - throughout

 

·         DoD Product Support Manager (PSM) Guidebook – throughout, but in particular:

 

o    Para. 3.5.2. Business Case Analysis

o    Para 4.2.5. Business Case Analysis step on the 12 Step DoD Product Support Strategy Process Model (and subsequent process model steps colored in green).

o    Table 1 (page 50) and subsequently throughout chapter 5 also indicates that a product support BCA is done at or for each major milestone.

o    Appendix A, Product Support Management IPS Element, which lists as sub-para 1.5. "Development and maintenance of Sustainment Business Case Analyses (BCAs)" (note use of the term sustainment BCA vice product support BCA, although in this context, the terms appear to be synonymous).

 

·         DoD Integrated Product Support (IPS) Element Guidebook throughout , but in particular para. 1.2.5. Business Case  Analysis (BCA). Note that in alignment with the PSM Guidebook, that Table  1.2.T1. Summary of Activities and Deliverables by Acquisition Phase, calls out  Product Support BCA at or for each milestone.

 

·         USD AT&L April 5, 2010 Policy Memo "Strengthened Sustainment Governance for Acquisition Program Reviews"  - the sustainment quad  chart outlined in this memo also discusses BCAs. In the schedule quadrant, shows BCAs done every five years. While the sample chart is "notional" it aligns with Sec 805 of Public Law 111-84 and  DTM 10-015.