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The Department of Defense- (DoD-) wide effort to reduce total ownership
costs (R-TOC) grew out of numerous reviews and discussions at Program
Executive Officers'/Systems Command (PEO/SYSCOM) Commanders'
conferences, the Defense Science Board, and others. The R-TOC program
was established in response to longstanding concerns about the adverse
impact of defense budgetary and operational trends on force structure
and readiness. Declining procurement funds are resulting in a rapidly
aging (and potentially inefficient and unsupportable) inventory. Rising
operations and support (O&S) costs can consume higher portions of
defense budget and leave even less available for modernization.
The purpose of the R-TOC program is to achieve readiness improvements in
weapon systems by improving the reliability of the systems or the
efficiency of the processes used to support them. New Technologies and
management practices may provide significant opportunities to improve
readiness and reduce ownership costs. In recent years, world-class
suppliers have achieved cost reductions while making major improvements
in customer support. Some DoD programs have achieved similar successes
in adopting private sector improvements in logistics and supply chain
management.
Program Background
Section 816 of the fiscal year (FY) 99 Defense Authorization Act
instructed DoD to select 10 programs to test program manager oversight
of life cycle costs (PMOLCS). Although DoD submitted 10 "Section 816
pilots" to Congress for their continuing review, DoD ultimately decided
to use 30 programs as pilots to test the R-TOC concept.
Click here.
The Pilots included platforms, munitions, and equipment at all stages of
the acquisition process from development through fielded systems. (See
Table.) This allowed the Pilots to explore the maximum range of
potential TOC reduction measures and to identify the major opportunities
and stumbling blocks at each phase of the acquisition process.
R-TOC Pilots and Acquisition Phases
| |
Army |
Navy |
Air Force |
| Development Systems |
Comanche
|
AAAV
|
|
| Production Systems |
ITAS
UAV Systems |
LPD-17
MTVR
SLAM-ER |
C-17
JSTARS |
| Mixture of Developmental and Fielded Systems |
Fire Support C2
Precision Fires |
Aviation Support Equipment
H-60 |
CCIC2S
SBIRS |
| Fielded Systems |
Apache
Abrams
CH-47
Guardrail
HEMTT |
Aegis Cruisers
Common Ship
CVN-68 Carriers
EA-6B |
AWACS
B-1
C-5
C/KC-135
F-16
F-117 |
Pilot Program Objectives
A May 1999 memo from the Under Secretary of Defense for Acquisition,
Technology and Logistics (USD/AT&L) stressed that the purpose of R-TOC
was to maintain or improve current readiness while reducing O&S costs.
The memo instructed the Services to focus on three general R-TOC
approaches. PDF file.
- Reliability and maintainability (R&M) improvements
- Reduction of supply chain response time and reduction of logistics footprint
- Competitive product support.
At the same time, the DoD "Strategy for Affordability" established a 20%
O&S cost reduction goal for FY2005. The 30 Pilot Programs were
instructed to develop an R-TOC baseline and implementation plan. These
plans were submitted in October 1999. Other activities by the Pilot
Programs included:
- Identifying proposed R-TOC initiatives (funded and unfunded)
- Submitting quarterly reports and lessons learned
- Documenting obstacles to accomplishment of R-TOC goals and proposed methods to surmount these obstacles.
DoD's new leadership has endorsed the continuation and expansion of
R-TOC. Under Secretary (AT&L) Edward C. Aldridge has made R-TOC savings
one of his principal metrics.
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