Cost As an Independent Variable (CAIV): Front-End Approaches to Achieve Reduction in Total Ownership Cost

Abstract

Abstract : During the latter half of the 1980s and throughout much of the 1990s, budget constraints were increasingly tight, resulting in Defense budget reductions. In an attempt to squeeze every penny from required resources, DoD leadership emphasized the necessity of controlling the of new warfighting systems -- not only the of development and production, but also the of sustainment. In 1995, Dr. Paul Kaminski, the Under Secretary of Defense for Acquisition and Technology (USDA&T), introduced the term cost as in independent variable (CAIV), in recognition that resources were tight and that weapon system costs -- life cycle costs -- would have to be managed and controlled through tradeoffs that occur during the developmental process. Decisive change did not result immediately, however, a group of pilot programs were identified within each Service that would provide lessons for Reduction in Total Ownership Cost (R-TOC). Furthermore, a relevant series of OSD and CJCS regulatory changes were published in 2003 and 2004, which were intended to Support CAIV and contribute to R-TOC. This research effort seeks answers to the following questions: Has the DoD put into place policy and implemented guidance to support CAIV as a practice in the acquisition of the DoD's warfighting systems? Has the DoD established the necessary processes and tools to monitor and control CAIV? Has DoD leadership exhibited the will and determination to control Total Ownership Costs of its warfighting systems? In the meantime, has the focus on CAIV and R-TOC somehow changed? Using data available from a variety of DoD sources and interviews with DoD personnel participants, this paper highlights changes in policy, process, and practice aimed at reducing system life cycle costs. The paper will point out new or remaining obstacles to the application of CAIV and R-TOC during Concept Refinement, Technology Development, associated JROC reviews, and Acquisition Milestones A & B.