dod joint weapons system product support business case analysis example

Product Support BCA Template: Giuntini & Company, Inc.

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MS C Review Product Support BCA Study Type II

for the XYZ

Joint Weapon System Program


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Table Of Contents

1. Executive Summary

2. Introduction

a. Problem Statement

b. Background

c. Scope

3. Desired Outcomes and Requirements

a. Desired Outcomes

b. Requirements

4. Assumptions and Methods

a. Ground Rules and Assumptions

i. Cost Drivers

ii. Affordability Enablers

b. Analysis Methods, Tools, and Rationale

c. Evaluation Criteria

5. Alternatives

a. Current Baseline/Anticipated Initial Support/Status Quo

b. Alternatives Reviewed

6. Mission and Business Impacts

a. Jointness Elements

b. Benefits and Non-Financial Analysis

c. Cost and Financial Analysis

7. Risk Analysis and Mitigation Plans

a. Risk Analysis

b. Mitigation Plans

8. Sensitivity Analysis

9. Conclusion

a. Selection of Preferred Alternatives

b. Financial Summary of Results


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10. Recommendations

a. Specific Actions Based on Business Objectives

b. Implementation Plan

11. Open Items

12. Appendix

a. Quantities/Locations: Tables and Map

b. Alternative Business Model Elements Selected For Each PSE Solution

c. Financial Analysis

d. Acronyms

e. Glossary of Terms

f. Bibliography g. BCA JIPT Charter h. PSI Selection Questionnaire i. Overview of Hypatia

j. Hypatia tool; all cost calculations (in MS Excel workbook) k. IPT member’s BCA study comments and author responses l. Schematic of Product Support life cycle stages


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1. Executive Summary

The core functionality of the XYZ Acquisition Category [ACAT] XX weapon system-of-record is

to provide the means for performing AAA activities. The following 5 end-user organizations, not

all employing the same system configuration, will be fielding an estimated 445 end-items, over

280 CONUS and OCONUS sites during a six year period beginning in 20XX, with the last fielded

end-item retired in 20XX:

1. Org1.

2. Org2.

3. Org3.

4. Org4.

5. Org5.

This Product Support Business Case Analysis [BCA] Type II study is to be employed in

the Milestone C [MS C] weapon system acquisition review by the XYZ Project Office of

the ZZZ Program Office of the WWW Joint Program Executive Office [JPEO] of the RRR

Life Cycle Management Command [LCMC].

The primary output of this Product Support BCA study is to recommend to Program

Management leadership a Product Support Enterprise [PSE] construct that provides the

best value for efficiently and effectively managing the Product Support processes

employed during the in-service life and End-Of-Life [EOL] of the XYZ weapon system.

Note that the XYZ system PSE is a virtual organization that is configured to deliver

specific solutions that achieve the objectives of: Materiel Availability [Am] (80% as

stated in the CDD), affordability (cost per end-item per period) and “jointness”.

This study’s construct follows that of the DoD Product Support BCA Guidebook and the

Defense Acquisition Guidebook. Emphasis on: simplicity, integrated approaches,


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assured continuity of resources, low logistics burden, flexibility and maintaining

interoperability with technologies outside of the XYZ system were also considered.

As a result of attempting to optimize the PSE construct, not all the end-user

organizations will be satisfied with the recommendations of this Product Support BCA

study; it will be up to end-user leadership, working with the PM Office, to develop a

consensus as to the required adjustments to the recommendations of this study.

Note that this Product Support BCA is one of few studies of its kind to ever be delivered

for a joint weapon system-of-record that includes five end-user organizations.

A Product Support BCA Type II study Integrated Project Team [IPT] was established to

provide inputs to this initiative. Product Support functional Subject Matter Experts

[SMEs] from all the end-user organizations were in attendance at the eight IPT

meetings that took place over a one year period. Inputs from the IPT were included in

this study; most were obtained during the eight IPT sessions.

The following Product Support processes were employed when crafting the construct of

the PSE:

• Processes performed in the field: (1) Correct item failure; driven by

reliability issues, (2) Replace item shrinkage; driven by the many items that

will be handled, misplaced and incorrectly reported during missions (3)

Correct minor damage; driven by CONOPS/OPTEMPO (4) Calibrate/test item;

driven by safety and reliability issues (5) Replace use-driven items; generated

by mission OPTEMO that drives wear and tear.

• Processes performed at a sustainment site: (1) Modify system; driven

by DMSMS and reliability issues, with no capability-driven modifications

included (2) Repair catastrophic damage to system (3) Reconstitute/reset

system; driven by deployments (4) Store/pre-position system short/long-term


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(5) repair/renew reparable parts.

Note that sustainment sites can be either Government or Contractor.

• Processes performed at End Of Life: (1) retire/store/preserve tooling (2)

dispose.

• Processes performed for system management (within PSM/PSI

Office): (1) performance oversight (2) PSE configuration (3) Test &

Evaluation (4) Quality Control (5) Logistics/Technical.

The BCA cost analytics employed an activity-based target-costing technique that

calculated the various Product Support costs that are to be incurred during each period

of the life cycle of the PSE; from the first end-item fielding to the last end-item being

disposed. Activity-based cost analysis was performed regardless of the funding source.

This approach is aligned with that of the Cost As-an Independent Variable [CAIV]

concept in the Defense Acquisition Guidebook. The following cost drivers were the

primary inputs to establishing the targeted cost: (1) Each end-user’s CONOPS (2) Each

end-user’s unique Bill Of Material [BOM] (3) Applicable Product Support processes for

each end-user (4) Frequency and duration of each Product Support process (5)

OPTEMPO/mission (6) Item design source; COTS, GOTS and Developmental (7) KPP

levels required (8) Period in which fielding occurs (9) Period of time that end-items will

be in-service (10) Product technology volatility (11) Congressional mandates/FAR (12)

Industrial base sources (13) Tech Data Package [TDP] ownership.

The PM Office has chosen to follow the guidelines of a Product Support Enterprise [PSE]

construct; reflected in the OSD Product Support Manager Guidebook. Note that XYZ, as

an ACAT XX weapon system, is not required by DoD doctrine to employ the PSE

concept. The PSE construct is the primary enabler in achieving the estimated 19% life

cycle cost reduction assumed in the BCA. These savings are driven by employing the


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existing commercial industrial base, mitigating DMSMS risks, employing joint initiatives

on indirect costs and other efforts.

Multiple alternatives to each business model employed for each solution were reviewed.

Multiple scenarios were performed for each of the alternatives in order to optimize Am,

affordability, jointness and risk mitigation. The business element alternatives reviewed

included supply chain transaction types, parts ownership, organic versus contractor

depots, joint versus end-user organization specific distribution centers and many other

alternatives. As a result of the selection of the preferred alternatives, the estimated PSE

life cycle targeted costs below were derived for each of the end-user organizations

employing the XYZ system.

Organization

XYZ System Annual Product Support Targeted Expenditures (2012 $millions)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 TOC

Org1 total $0.5 $1.6 $3.0 $4.7 $6.7 $8.0 $8.3 $35.4 $7.9 $7.7 $13.7 $6.4 $25.5 $4.1 $2.3 $0.8 $136.7

# end-items 11 39 73 117 168 206 216 216 216 216 206 185 159 117 60 14 per end-

item $0.04 $0.04 $0.04 $0.04 $0.04 $0.04 $0.04 $0.16 $0.04 $0.04 $0.07 $0.03 $0.16 $0.03 $0.04 $0.06 $0.06

Org2 total $0.4 $1.9 $3.7 $5.2 $6.6 $7.6 $7.6 $14.7 $7.2 $7.0 $8.2 $5.2 $7.6 $2.3 $1.0 $0.2 $86.4

# end-items 3 13 26 37 48 56 57 57 57 57 54 44 31 20 9 1 per end-

item $0.14 $0.15 $0.14 $0.14 $0.14 $0.14 $0.13 $0.26 $0.13 $0.12 $0.15 $0.12 $0.24 $0.11 $0.11 $0.13 $0.15

Org3 total $0.0 $0.4 $1.1 $1.8 $2.2 $2.1 $2.1 $4.9 $2.0 $1.9 $2.6 $1.6 $2.4 $0.3 $0.0 $0.0 $25.4

# end-items 0 3 9 15 18 18 18 18 18 18 18 15 9 3 0 0 per end-

item $0.00 $0.00 $0.12 $0.12 $0.12 $0.12 $0.12 $0.27 $0.11 $0.11 $0.14 $0.00 $0.00 $0.00 $0.00 $0.00 $0.14

Org4 total $0.0 $0.0 $0.0 $0.3 $1.0 $1.5 $1.8 $10.6 $1.7 $1.6 $4.0 $1.6 $10.3 $1.3 $0.8 $0.4 $36.8

# end-items 0 0 0 25 75 122 143 143 143 143 143 143 143 118 68 21 per end-

item $0.00 $0.00 $0.00 $0.01 $0.01 $0.01 $0.01 $0.07 $0.01 $0.01 $0.03 $0.01 $0.07 $0.01 $0.01 $0.02 $0.03

Org 5 total $0.1 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $1.6 $0.2 $0.2 $0.3 $0.0 $0.0 $0.0 $0.0 $0.0 $3.7

# end-items 6 11 11 11 11 11 11 11 11 11 6 0 0 0 0 0 per end-

item $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.14 $0.02 $0.02 $0.05 $0.00 $0.00 $0.00 $0.00 $0.00 $0.03

Total $1.0 $4.1 $8.0 $12.3 $16.7 $19.5 $20.0 $67.2 $19.0 $18.5 $28.8 $14.7 $45.9 $7.9 $4.1 $1.4 $289.1

# end-items 20 65 119 205 321 412 445 445 445 445 426 387 342 258 136 37 per end-

item $0.06 $0.08 $0.09 $0.07 $0.06 $0.05 $0.05 $0.17 $0.05 $0.05 $0.08 $0.04 $0.15 $0.03 $0.03 $0.04 $0.06

*Note: cost spikes in table are modification driven


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The recommended PSE construct is to manage an estimated 78% of the life cycle

targeted costs through a Joint Product Support Provider [JPSP]; focused upon selective

item support. The JPSP would have three Product Support hubs in CONUS and 2 hubs

in OCONUS. The remainder of the 22% of life cycle costs would be managed by each

end-user organization, as well as the Product Support Integrator [PSI] Office. The JPSP

would also deliver solutions, on a case-by-case basis, to complement the individual

efforts of the end-user organizations. Note that all recommended alternatives were

provided with a cost target; the PM Office and the Organizations should not request

funding that surpasses the targeted costs.

The recommendations of this study drive the Life Cycle Sustainment Plan [LCSP]; a

report delivered by the Product Support Manager [PSM] to the Program Manager at the

MS C review.

Upon the approval of the LCSP, the implementation period of the PSE for the XYZ

system will be an estimated 12-18 months. The first tasks to be performed are the

establishment of both the JPSP described above and the PSI Office. During this period,

each end-user organization will begin the integration of XYZ system requirements into

their current logistics operations for non-jointly managed items.


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2. Introduction

2a. Problem Statement

The XYZ Program Office requires a majority of life cycle Product Support solutions to be

jointly delivered and at the same time assure that all the Product Support processes

employed during the In-Service life and End-Of-Life of the weapon system achieve

Materiel Availability [Am] and targeted cost objectives.

2b. Background

The XYZ program is a weapon system-of-record that is primarily configured as a

Commercial Off The Shelf [COTS] end-item that provides the warfighter with a AAA

capability. As stated in the Buying Commercial: Gaining the Cost/ Schedule Benefits for

Defense Systems, Report of the Defense Science Board Task Force on Integrating

Commercial Systems into the DOD, Effectively and Efficiently. February 2009, Office of

the Undersecretary of Defense for Acquisition, Technology and Logistics [OUSD

(AT&L)], "In the 21st century, adversaries of the United States can and do buy

advanced commercial systems. DOD therefore, must find ways to accommodate these

commercial practices to maintain a technological edge." This will hold true both for the

acquisition of COTS items, as well as the management of their Product Support.

The core functionality of the XYZ weapon system is to provide the means for

performing BBB activities. The system has the following attributes:

• Modular packaging of equipment.

• Ability to transport the mission gear effectively.

• Mission durations of up to xx hours.

• Allows for transportation worldwide by air lift, external lift and landing craft.

• Others


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The XYZ system is currently to be fielded with five system configurations in order to

meet the specific requirements of five end-user organizaitons.

A Product Support BCA Type I study for “MS B” review was delivered in May 20xx to the

PM Office. As a result of extensive changes to the system configuration, changes to the

units to be delivered and many other factors, including the change in the name of the

weapon system, a minority of the Type I BCA study was applied to the Type II BCA

study.

A Product Support BCA IPT [IPT] was established in order to optimize the

inputs/outputs of the BCA study. There were eight 1-2 day meetings in which a variety

of issues were addressed. The IPT participants represented the following end-user

organizations:

• XYZ Joint Program Manager [JPM] Office.

• JPEO ZZZ Enterprise Logistics Initiative [ELI] team.

• Test Center.

• Contractor.

• Org1 Material Developer.

• Org2 Project office.

• Org3 LCMC.

• Org2 Combat Developer.

• Org1 LCMC.

• Org5 Sustainment Directorate.

• Defense Logistics Agency [DLA].

• Others.

The key accomplishments of the BCA IPT were the following:

Establishment of an IPT charter; commitment by the end-user organizations to

the success of the construct of the Product Support Enterprise [PSE] alternatives


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were discussed. See Appendix-g for details of charter.

Engagement of the Joint Program Executive Office [JPEO] ZZZ Enterprise

Logistics Initiative [ELI] team; assisted the IPT in identifying PSE alternatives

that could be both effective, affordable and within Governmental regulations.

Development of a common terminology when discussing Product Support

concepts across all end-user organizations; a major challenge due to the

different Concept Of Operations [CONOPS] of each end-user.

Focus on the impact upon Total Ownership Cost [TOC] when setting Product

Support Strategy [PSS] priorities; improved effectiveness of IPT in setting the

focus of discussions on what is important on a strategic level.

Robust review of the Materiel Availability [Am] Key Performance Parameter

[KPP], at Location A on X NOV 20X, in order to develop better clarity of the

inputs required for populating the metric; one of the major drivers for the

quantity of indirect resources employed in a PSE.

Recognition that the source of funding for the execution of PSE alternatives is

critical; without this area being addressed, through the flow of Operation &

Sustainment/Maintenance [O&S/M] or acquisition budgeting/POM funding, an

“out-of-the-box” construct of a PSE alternative is of little value.

Recognition that due to the employment of COTS items in the configuration of

XYZ system, many Diminishing Manufacturing Sources/Materiel Shortages

[DMS/MS], End-Of-Life [EOL] and tech refresh process challenges will occur; it is

estimated that during the 16-year life of this system in DoD inventory, 2-3 tech

refresh modification processes will be employed on the system.


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As stated in the previously cited OUSD (AT&L) Buying Commercial report, "A

primary advantage of using many commercial items is access to a commercially

driven maintenance infrastructure. A corresponding disadvantage is that the

products overseen by commercial suppliers do not remain constant over the life

of a typical defense system, owing to the need for commercial suppliers to keep

advancing the capability and/or efficiency of their product in order to stay ahead

of competitors."

The IPT was briefed by the author of this study, based upon his 37 years of

commercial and military Product Support experience, that without an aggressive

Product Support parts Supply Chain Management [SCM] initiative, the Am and

affordability of this weapon system would deteriorate within 6 months after the

beginning of fielding. This weapon system is a set of products bundled to deliver

a solution, rather than one assembled product, as in an aircraft; lots of “stuff can

happen” in keeping all these “moving pieces” together as one weapon system.

Reliability issues, usually a major Product Support cost driver, were recognized

as not being material in impacting TOC.

The 8 IPT working sessions in XX, USA took place on:

1. X August 20XX.

2. X September 20XX.

3. X October 20XX.

4. X November 20XX.

5. X December 20XX.

6. X January 20XX.

7. X April 20XX.

8. X June and X July 20XX.


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A PM Office Leadership status review session took place in XX, USA on X December

20XX with LTC XXX.

A Materiel Availability review session took place in XX, USA on X November 20XX.

A review of the Product Support, life cycle, activity based, target cost estimating tool,

Hypatia©, employed in the BCA, took place in XX, USA on X October 20XX.

The first rough draft of the BCA study was delivered on X March 20XX. Several re-writes

were performed over a five month period, based upon formal and informal IPT inputs.

The inputs from the IPT, as much as possible, were included in this study. Note that the

leadership from each end-user organization employing the XYZ system will have the

final word as to the acceptance of the conclusions and recommendations of this study.

2c. Scope

This Product Support Business Case Analysis [BCA] study is to be employed by the

Program Manager [PM] Office of the XXX Joint Program Executive Office [JPEO] of the

XXX Life Cycle Management Command [LCMC] in their Milestone C [MS C] System

Acquisition review for the XYZ weapon system. This Product Support BCA study has

employed a disciplined and previously applied methodology for recommending the

preferred Product Support Strategy [PSS].

The Product Support BCA may be somewhat different from other decision support

analyses through its emphasis of the enterprise-wide perspective of Product Support

stakeholders and decision makers. Other studies that encompass some of the attributes

of a BCA are: Economic Analysis, Cost-Benefit Analysis, and Should-Cost Analysis.

This Product Support BCA provides the findings and the resulting conclusions that drive

the recommended actions to achieve stated Program Manager Office objectives and


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desired outcomes. The Product Support BCA output is a major input to the Life Cycle

Sustainment Plan [LCSP].

This Product Support BCA does not replace the judgment of the decision making of

Leadership; it provides an analytic, standardized, and objective foundation upon which

credible decisions can be made. This Product Support BCA is a comprehensive and

accurate effort at selecting the preferred alternative of the many elements that are

employed in delivering a balance between Am and affordability; there is a recognition

that a common tension between process efficiency and effectiveness exists among the

stakeholders in a Product Support Enterprise.

This Product Support BCA incorporates background research, due diligence,

governance, and data management; these initiatives assure the output of a quality

study that can meet the rigorous requirements of the “MS C” review. The ultimate focus

of the Product Support BCA is to accurately portray the future operationally and

financially state of the PSE.


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3. Desired Outcomes And Requirements

3a. Desired Outcomes

Establish a PSE construct, a virtual organization, to be employed in managing field and

sustainment maintenance activities throughout the in-service life of the XYZ weapon

system, as well as the management of its End-Of-Life [EOL]. The Product Support BCA

study recommendation balances the following four objectives of a PSE:

1. Achieve a required level of system Materiel Availability [Am].

2. Establish an affordable target cost in achieving system Am.

3. Deliver an optimal number of solutions that employ “jointness.”

4. Mitigate the risks of the PSE delivering unfavorable Am or affordability results.

Display 3a-1 is a schematic of this desired outcome.

Display 3a-1


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A schematic of the weapon system life cycle and where the PSE fits in the overall

picture is displayed in Appendix 12:i.

The Product Support life cycle cost is typically the largest cost element of Total

Ownership Cost [TOC]. For the XYZ system, Product Support will drive the plurality of

TOC. Below in Display 3a-2 is a general distribution of TOC elements; derived from DoD

data sources. XYZ system Product Support life cycle costs will be more than the average

DoD weapon system.

Display 3a-2

The owner of the Product Support BCA study was directed by the PM Office leadership

to employ a joint-focused approach as the preferred Product Support Strategy [PSS]. It

was the belief of the PM Office leadership that Product Support “jointness” would result

in greater affordability due to the following:

• Less safety/insurance stock for Product Support parts;

the less the number of stocking points for each end-user organization, the

lower the demand forecasting inaccuracies, and the lower the inventory

investment to meet Am.


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• Less DMSMS driven obsolescence costs;

tighter centralized configuration control will improve effectiveness and

efficiency in product modification phase-out/phase-in activities.

• Less indirect costs due to economies of scale when each end-user

organization is not employing their own;

o Facilities

o Personnel

o Equipment

o IT infrastructure

o Other

3b. Requirements

The Capability Development Document [CDD] for the XYZ system had only one

reference to any Product Support requirements; a minimum 80% Materiel Availability

[Am]. No further Product Support Key Performance Parameters [KPPs] were employed

in the CDD, such as level of “jointness” and cost-per-fielded-end-item-per-year. Nor was

there any numerator, or denominator detailed in the Am. As a result, a one-day session,

at the PM Office in XXX, USA, on X November 20XX was organized in order to define in

detail the calculation of the 80% Am.

The Am calculation factors, resulting from the above meeting, were defined as the

following:

• Denominator= average number of deployable and non-deployable fielded units,

at month-end, during a rolling twelve month period.

• Numerator=average number of deployable and non-deployable fielded units at

month-end, during a rolling twelve month period, which were classified as

available to perform their mission.

• Table (Display 3b-1) below provides an example of the calculation.

Display 3b-1


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Fielded End-Items

Month 12 Mth. Avg. 1 2 3 4 5 6 7 8 9 10 11 12

# Available 421 393 411 439 407 316 429 422 398 408 446 435 410

Total # 450 450 450 450 450 450 450 450 450 450 450 450 450 Period

Am 94% 87% 91% 98% 90% 70% 95% 94% 88% 91% 99% 97% 91%

Note that on a month by month basis large variations in Am can occur, for example a

modification program could temporarily remove many end-items from the field while

they are upgraded at a depot.

The PM Office, working with an independent analysis organization delivered a study

addressing the Am of the XYZ system; they concluded that due to high reliability,

redundancy of products within the XYZ system and the planned OPTEMPO of end-

users, actual Am levels of over 90% will most likely be achieved.

This Product Support BCA study has attempted to conform to the “Chairman of the Joint

Chiefs of Staff Instruction (CJCSI) 3170.01F.” This memorandum implemented a

mandatory Product Support Key Performance Parameter (KPP) Materiel Availability

[Am], along with two mandatory Product Support Key System Attributes (KSAs):

Materiel Reliability and Ownership Cost. These metrics, along with Mean Downtime,

aligned recent Joint Staff actions and established a single set of Product Support

metrics throughout a program’s life cycle. Goals for these four outcomes should be

established early in the concept decision process, refined throughout the design

development process, and then carried through as program baseline goals until system

retirement. Status towards these goals should be reported at Program Reviews.”

Note that KSAs have yet to be defined by the PM Office, but attempts have been made

in this study to estimate what the KSAs would have to be in order to meet Am.


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4. Assumptions and Methods

4a:i Ground Rules and Assumptions: Cost Drivers

The following elements were applied:

1. The assumed number of units to be fielded by each end-user organization, by

their deployability and their locations are listed in Display 4a:i-1; this was

provided by the PM Office and the end-user organizations. Note that this

assumption has had a number of changes over the last six months, and continues

to evolve.

Display 4a:i-1

# of End-items Per Service Per Location & # of End-Item Sites

Org Segment

Deployable End-Items

Non-Deployable End-Items

L-T Storage

End-Items

End-Item Totals All

CONUS OCONUS CONUS OCONUS CONUS CONUS OCONUS

Org1 Active 111 11 8 0 0 119 11 130 Org1 Non-Active 85 1 0 0 0 85 1 86 Org2 Active 54 3 0 0 0 54 3 57 Org3 Active 12 4 0 0 0 12 4 16 Org3 Non-Active 0 0 2 0 0 2 0 2 Org4 Active 20 10 62 28 0 82 38 120 Org4 Non-Active 0 0 23 0 0 23 0 23 Org5 Active 7 0 4 0 0 11 0 11

Total End-Item Quantity 289 29 99 28 0 388 57 445

445 Fielded Units

∼280 Global Sites


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# of End-items Per Service Per Location & # of End-Item Sites

Org Segment

Deployable End-Items

Non-Deployable End-Items

L-T Storage

End-Items

End-Item Totals All

CONUS OCONUS CONUS OCONUS CONUS CONUS OCONUS

Total Sites of End-Items 210 37 33 0 0 243 37 280

Deployability Status Planned % of Delivered End-

Items

Deployable 71% Non-Deployable 29%

Spares 0% Total 100%

Note that the XYZ system will be one of the most geographically dispersed systems in

the DoD inventory.

A “deployable end-item” connotes that an end-item is assigned to an end-user that will

be able to employ the end-item in the case of a mission event. Each end-user

organization has different terms for “deployable;” for this study this term will be

employed for all the end-user organizations.

2. The assumed 6 year end-item fielding schedule and 6 year end-item retirement

schedule is provided in Display 4a:i-2; a very preliminary information data set was

provided by the PM Office. Note that this fielding schedule could be changed

significantly in the future.

Display 4a:i-2

Organization

End-Items In-Service (period average rounded) Production/Fielding Stage Fully Fielded Stage Retirement Stage

20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX

Org1 11 39 73 117 168 206 216 216 216 216 206 185 159 117 60 14 Org2 3 13 26 37 48 56 57 57 57 57 54 44 31 20 9 1


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Organization

End-Items In-Service (period average rounded) Production/Fielding Stage Fully Fielded Stage Retirement Stage

20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX 20XX

Org3 0 3 9 15 18 18 18 18 18 18 18 15 9 3 0 0 Org4 0 0 0 25 75 122 143 143 143 143 143 143 143 118 68 21 Org5 6 11 11 11 11 11 11 11 11 11 6 0 0 0 0 0 Total 20 65 119 205 321 412 445 445 445 445 426 387 342 258 136 37

3. The assumed life of a deployable fielded end-item is 10 years; provided by PM

Office. Note that fielding and retirement quantities are not a mirror image due to

average beginning and ending periods employed for computations. Non-

deployable end-items will remain in inventory until the EOL of the system; as a

result some end-items will be in inventory as long as 16 years.

4. The assumed deployability status of the end-items is derived from the following:

• Service provided counts for deployable (i.e. garrison training) and non-

deployable (i.e. school house) fielded end-items.

• Deployed units, for military or humanitarian events, were estimated as a

percentage of deployable units; an average of 3-5% of deployable units will

be deployed during any one year. Note that there is no differentiation for

supplemental or O&S/M funding sources.

• No end-user organization has identified its intention of acquiring end-items

for long-term storage; currently no end-items are populating the analytic tool.

5. The following 5 Bill Of Material [BOM] variants were applied throughout the

analysis. The BOMs identified which items were employed in each system

configuration, as well as the quantity of each item. For example. Part Number

ABC was included in the Org1 end-item, but not in the Org2 end-item, and there

is a quantity of 4 for Part Number ABC in each of the Org1 end-items :

• BOM Variant #1: Org1.


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Display 4a:i-3 provides an overview of the different BOM for each end-user

organization employing the XYZ system. Note that the BOMs have had many

changes, with potential future changes still being considered.

Display 4a:i-3

BOM

XYZ System Capability Key Item Qty Per

Organization Employing Capability

Description Key Item

Org

1

Org

2

Org

3

Org

4

Org

5

Sensors/ Meters

A a 1 1 0 0 1 B b 2 2 0 2 2 C c 2 0 0 2 2 D d 6 15 0 6 1

E e 2 2 0 2 4

F f 1 4 0 0 2

G g 4 6 4 6 4

H h 5 5 5 5 5 I i 1 2 1 1 1 J j 2 4 2 6 2

Electronics

A a 1 2 0 1 2

B b 2 2 0 2 2 C c 2 2 2 2 0

D d 8 15 0 3 12

Electrical A a 1 1 0 0 0 B b 1 1 0 0 1 C c 6 6 1 0 6 D d 1 1 2 0 2

E e 1 1 0 0 1

Mechanical


23

BOM




Org

1

Org

2

Org

3

Org

4

Org

5

A a 1 1 0 0 1

B b 7 7 6 0 0

C c 1 1 0 0 1

D d 2 2 2 0 2

E e 8 8 6 6 12 F f 8 8 6 6 12

G g 2 2 2 0 2 H h 1 1 0 0 1 I i 1 2 1 0 1

Structure A a 2 3 0 0 0 B b 0 0 2 2 2

Hardware/ Soft goods A a 8 8 3 0 6 B b 1 1 1 1 1

C c 8 8 8 8 16

D d 2 3 2 2 2 E e 1 0 0 0 1 F f 4 6 0 2 4 G g 2 3 2 2 2 H h 2 2 2 2 2 I i 2 2 2 2 2

Ensembles A a 8 22 6 6 12 B b 8 22 6 0 12 C c 8 22 6 6 12 D d 8 8 0 0 0 E e 8 22 6 0 12

Application Software

A a 1 1 1 1 1

6. Upon the analysis of the BOM, the source-of-design was identified to be the

following:


24

• Commercial Off The Shelf [COTS] items; 85% of end-item value.

• Government Off The Shelf [GOTS] items; 10% of end-item value.

• Developmental Items [DIs]; 5% of end-item value.

The above has significant impacts on managing modifications and Product

Support reliability processes.

Note the above value percentages are exclusive of system design/integration

costs.

50% of the value of the end-item is configured exclusively with short life cycle

reparable COTS items (i.e. XX sensor from XX OEM); it is assumed that these

items will be modified periodically. These modifications may include some minor

changes in capabilities. The modifications will primarily address Diminishing

Manufacturing Sources Material Shortages [DMSMS] issues, reliability

improvements and other non-capability enhancing changes. Upon each

modification event, projected failure costs are re-initialized based upon several

factors. All modifications are assumed to be vetted through the Test & Evaluation

[T&E] process. Funding will be sourced from the O&S/M POM. The analysis of

DMSMS issues has employed the OSD “SD-22, Diminishing Manufacturing Sources

and Material Shortages: A Guidebook of Best Practices for Implementing a Robust

DMSMS Management Program.”

7. The entire 6 year period of the system production stage will be delivered with

only one configuration for each BOM variant. Any modifications that will be

employed will occur only after the production life cycle stage is completed. Note

discussions are in progress to change the frequency of modifications. A “what-if”

cost analysis has been performed to better understand the impact of changes to

the BOM revisions levels during production.

8. It is assumed that there will be the following field and sustainment maintenance

activities employed during the life of the system:


25

• Field Maintenance

(The assumed field maintenance plan, for both reparable and non-reparable

items, is aligned with the Maintenance Allocation Chart [MAC]; currently in-

process of being validated).

• Correct item failure: driven by reliability issues.

• Replace item shrinkage: driven by the many item employed during

missions and the high probability that they will be lost, misplaced and

employed with poor record management.

• Correct minor damage: driven by CONOPS/OPTEMPO.

• Calibrate/test item.

• Replace use-driven items: generated by mission OPTEMO, such as wear

and tear on ensembles.

• Sustainment Maintenance

• Modify system: design change volatility impacts the frequency of

modifications. Broken down by COTS items, GOTS items and

Developmental Items [DIs]; note that these modifications are primarily

driven by DMSMS and reliability factors.

• Repair catastrophic damage to system: historical data that drives the

frequency of the process.

• Reconstitute/reset system: estimate of deployments that drive the

frequency of the process.

• Store system short/long-term: previous experience of the frequency

and duration of process.

• Renew reparable items.

Note that not all products configured in an end-item are employed in each

maintenance process (i.e. consumables are not modified).


26

9. The OPTEMPOs in Display 4a:i-4 are assumed to be employed throughout the life

of the program. The cost baseline of the BCA study utilizes an annual frequency

of 12 employments. Frequencies were provided by each end-user organization.

Display 4a: i-4

Annual Frequency Of The Use Of A XYZ System End-Item

Deployable Service End-Items (i.e. Garrison Training)

Org1 Org2 Org3 Org4

Active

Org5

Active Active Non-

Active Active

Non-

Active Active

Non-

Active

4 2 6 4 1 .5 .5 15

Non-Deployable Service End-Items (i.e. Schoolhouse)

Org1 Org2 Org3 Org4

Active

Org5

Active Active Non-

Active Active

Non-

Active Active

Non-

Active

12 10 10 10 2 1 8 -

10. Indirect costs were included in all calculations; primarily supervisory/

administrative personnel, facilities, equipment, materials and data/voice/imagery

infrastructure. They were derived as an estimated percentage of forecasted direct

(parts and tech labor) costs.

11. Due to the configuration of the XYZ system, little direct labor (i.e. maintainers) is

planned to be employed in field maintenance activities; these were considered

immaterial costs and were excluded in the BCA study cost analysis, though place-

holders were established if the assumption was to change.

12. Average age of fielded end-items is an input to failure and modification activities;

reflected in chart (Display 4a:i-5) below.

Display 4a:i-5


27

Average Age of Fielded End-Items (yrs)

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

20XX

0.5 1.0 1.5 1.9 2.1 2.4 3.2 4.2 5.2 6.2 7.2 7.8 8.6 9.2 9.8 10.0

13. The estimated acquisition unit cost of each item of the BOM was provided by

OEM. This unit cost is a primary cost driver; the assumption is that there is a high

correlation between the value of an item and the Product Support costs

associated with that item. For example a $10,000 sensor will incur a higher life

cycle Product Support cost than that of a $1,000 radio.

14. The estimated renewal/repair cost for reparable items were calculated as a

percentage of item acquisition cost. For example the repair cost of a $100 item is

20% of its value, or a $20 repair cost. Derived from discussions with OEMs and

like-kind product data sets.

15. The product classifications of all BOM items were provided by the OEM. This

element is a primary cost driver. There are 8 product classifications:

sensors/meters, electronic, electrical, mechanical, application software, structure,

hard/soft goods and ensembles. Each of these classifications has a different Cost

Estimating Relationships [CER] employed in target cost estimating.

16. The cost of a modifying an item was derived through a market survey; calculated

as a percentage of acquisition cost. Direct and indirect modification costs are 60%

of new; if an item value is $1,000 then a modification will cost $600.

17. The study calculates only in constant 2012 dollars; DoD can provide expected

inflation rate over the life of the system to reflect Current Dollars.


28

18. No Technical Data Package [TDP] is to be purchased for any COTS item.

4a:ii Ground Rules and Assumptions: Affordability Enablers

Continuous Process Improvement [CPI] initiatives were assumed to be employed

throughout the life of the system. A commercial CPI metric was employed that applied

data sets from the Bureau of Labor Statistics [BLS] as a baseline. It was assumed that

annually, 2.25% of cost savings, after a 20% “give-back” is provided to contractors,

could be achieved throughout the life of the system; this is compounded per year,

resulting in the CPI initiative providing an estimated savings of 19% over the 16 year

life of the system. These savings are obtained by the following three initiatives:

• Decrease the frequency of a process event.

For example, improve product reliability and as a result decrease the lifetime

quantity of an item employed in the process of fixing a failure.

• Decrease the duration of a process event.

For example, improve the supply chain management of a product by having the

right part, in the right quantity available to be employed in a Product Support

process.

• Lower the unit cost of a resource employed in a process.

For example, find a lower source for the repair of a reparable LRU.

The employment of the global commercial Product Support infrastructure was a

critical element in managing affordability. There were two areas that were

incorporated into Product Support solution sets:

• Use of the OEM’s distributors and depots for SCM support.

• Use of supplier-owned parts to support requirements for high cost/high tech

reparable items. The assumption is that supplier-owned reparable items

employed for Product Support will be able to be delivered to the production


29

process as a not-new condition item. This will have a dramatic impact upon parts

initial provisioning investment.

Manufacturer warranties are assumed to be in place for one year after each end-item

fielding. No costs for reliability-based failures are to be incurred during the first year

of the fielding of an end-item. This must be a negotiated CLIN in the production

contract in order to be effective.

Any post-fielding manufacturer warranties have not been assumed to occur, but it

could be an input to CPI initiatives.

Display 4a:ii-1 provides an overview of how warranty cost savings were calculated.

Greater detail is available upon a review of Hypatia.

4a:ii-1

1-Year Mfg Warranty Reduction Upon TOC; Covers Only Correct-Failure Product Support Process For The First Year After An End-Item Has Been Fielded

Descriptions

Product Categories Configured In The XYZ Weapon System

Total Sensors/ Meters Electronic Electrical Mechanical Structure

Hardware/ Soft

goods Ensemble Application

Software

TOC Reduction Per End-Item

Due To Warranty ($000)

$1.7 $0.4 $0.1 $0.5 $0.0 $0.0 $0.0 $0.2 $3.0

Note two potential affordability enablers were not considered for this study, but could

be, if directed by leadership:

1. Bundled solutions from the OEM after the expiry of the manufacturing

warranty, which is often referred to as an “extended warranty.” Examples of

this solution set may include providing failed items, tech support and upgrades


30

for a fixed-price-per-period-per-end-item. This type of offering may or may not

be advantageous; it depends often on how a contract is crafted.

2. Long-term contracts that are beyond a 2-year period. Due to the volatility of

funding in the coming years, this area was not considered, but could be

revisited at another time.

The PM Office has chosen to follow the guidelines of a Product Support Enterprise

[PSE] management construct; reflected in the OSD Product Support Manager

Guidebook. Note that XYZ, as an ACAT X weapon system, is not required to employ

the PSM concept, but the PM Office has chosen to embrace it in order to meet

affordability objectives. It is estimated that for each one dollar of cost incurred in

employing the PSI Office, seven dollars will be eliminated as a result of affordability

improvement initiatives. Display 4a:ii-2 visually depicts the construct of a PSE.

4a:ii-2


31

4b. Analysis Methods, Tools and Rationale

The product profile materially impacts what processes are to be employed by the XYZ

system PSE, as well as the amount of resources that are to be engaged for each

process event. The following 4 elements comprise the product profile:

• Product category

• Product life duration

• Product maintainability strategy

• Source of product design

For the XYZ system, the following 8 product categories were extracted from the Bill Of

Material [BOM] file. Also included are examples of items in the product category. Each

category has distinct cost drivers for each Product Support process.

1. Sensors/Meters (i.e. Detector)

2. Electronic (i.e. Radios)

3. Electrical (i.e. Power conditioner/UPS)

4. Mechanical (i.e. Gear)

5. Structure (i.e. Container)

6. Hardware/Soft goods (i.e. Filter)

7. Ensemble (i.e. Harness)

8. Software/computer (i.e. Toughbook)

Below in Display 4b:ii-1 is the estimated product value content of each end-item for the

5 configurations to be delivered. Note that end-item product costs are still evolving, as

well as that of the final configurations.

Display 4b:ii-1

Product Estimated Product Content Value Per End-Item

Org1 Org2 Org3 Org4 Org5


32

Product Estimated Product Content Value Per End-Item

Org1 Org2 Org3 Org4 Org5 Sensors/ Meters $250,000 $310,000 $130,000 $250,000 $250,000 Electronics $40,000 $70,000 $10,000 $40,000 $50,000 Electrical $15,000 $20,000 $5,000 $1,000 $13,000 Mechanical $40,000 $70,000 $30,000 $20,000 $50,000 Structure $100,000 $150,000 $0 $0 $0 Hardware/ Soft goods $30,000 $40,000 $15,000 $30,000 $30,000 Ensembles $30,000 $90,000 $25,000 $10,000 $45,000 Application Software $10,000 $10,000 $10,000 $10,000 $10,000

Total $515,000 $760,000 $225,000 $361,000 $448,000 # of end-items to be fielded 216 18 143 11 57 End-item value fielded; does not include integration costs $111,240,000 $13,680,000 $32,175,000 $3,971,000 $25,536,000

Total end-item production value $186,602,000

For the XYZ weapon system, modifications are primarily driven by Diminishing

Manufacturing Sources Material Shortages [DMSMS] issues. Most products are COTS

items, whose End-Of-Life [EOL] considerations are driven by the OEM and their

commercial customers, and not the government’s Test & Evaluation [T&E] standards

group. Note that the PM Office’s T&E organization will be the focal point for controlling

all engineering changes for all items configured in a XYZ system BOM.

The 4 product life duration ranges below were established in this study to group

products into modification categories. Note that specific product modifications will be

block-upgrades; all systems are modified in the same period. An assumption is that all

fielded end-items during the planned six years of production would have the same

configuration; only after the end of production would modifications be planned to be

employed.

1. Very low (modifications every 3-5 years).

2. Low (modifications every 6-9 years).

3. Medium (modifications every 10-15 years).

4. High (modifications every 16-20 years).


33

The product maintainability strategy is driven by the Level Of Repair Analysis [LORA].

This strategy impacts the resources (i.e. parts, maintainers, tooling) positioned in the

field, as well as the forward and reverse supply chain flows. This study classifies all

items into one of the following 4 levels of repair strategies:

1. Reparable/Sustainment maintenance;

products are not to be renewed/repaired in field. They are to be removed and

evacuated to a contractor or government sustainment maintenance facility for

renewal/repair. These products are often referred to as Line Replacement Units

[LRUs].

2. Reparable/Field Maintenance;

products are to be renewed/repaired in the field either employing maintainers or

trained operators.

3. Non-reparable;

products cannot be renewed/repaired upon their impairment.

4. Consumable;

products are designed to be disposed after a period of use.

The source of product design materially impacts the: frequency of modifications,

reliability levels, the Source Of Repair Analysis [SORA], technical data accessibility and

other factors. All products are classified into one of the following 3 source of design

groups in this study:

• Commercial Off The Shelf [COTS];

product research and development by manufacturer was focused upon

commercial market. No Research & Development [R&D] funds were obtained

from DoD. This is the vast majority of XYZ system items.


34

• Government Off The Shelf [GOTS];

product development funding was incurred by another Government Program

Office. The product is available to be employed in other systems, without the

incurrence of the amortization of development cost. Note that there typically one

Inventory Control Point [ICP] for managing the Product Support parts activities

of this product. There were a small amount of products classified as GOTS in the

XYZ system.

• Developmental;

product development is funded by the PM Office. There were a small amount of

products classified as such in the XYZ system.

There are many Product Support processes that are employed in Field Maintenance and

Sustainment Maintenance. Each process drives specific demands for solutions. For

example some solution demand is driven by failure, some by the return of a combat

unit from deployment or some by random accidents.

Demand can be forecasted by two overarching techniques: independent demand, which

extrapolates historical data, or dependent demand, which analyzes the impact of future

events. This study is focused upon the latter, dependent forecasting.

For the study of this weapon system, the following 10 Product Support processes were

identified as driving the overarching demand for solutions:

• Field Maintenance;

Category of processes that are performed on the system in the field. Note that

the maintainer/operator resources employed will be immaterial for the XYZ

system. Most items will be evacuated for renewal/repair to a contractor or

government depot, as well as items requiring calibration. Note that this area is

still under discussions with the end-user organizations. Calibration does not


35

materially impact TOC.

1. Correct failure;

convert impaired item to non-impaired item. Note the terms “impaired” or

“non-impaired” are employed in this study to indicate that a product cannot

(impaired) or can (non-impaired) deliver its intended capabilities.

2. Correct minor damage;

fix only that which is damaged. Minor damage is a constant occurrence with

weapon systems; sometimes a product must be replaced, or cosmetic

damage can occur which may or may not be resolved.

3. Replace shrinkage;

with parts mobility and the very nature of its mission, products will be

misplaced/lost/abandoned. Most of this loss will occur with the large group of

consumables, but their cost impact is small. It is assumed that this shrinkage

will not be the result of Property Book losses charged to individual uniformed

personnel for expensive sensors.

4. Perform period-based testing/calibration;

this process is primarily focused upon safety issues. A product such as an

out- of-calibration meter assembly may be exchanged with a calibrated

product, or as in the case of the containment system may be calibrated on-

site.

5. Perform use-based renewal/replacement;

this process requires the replacement of a product that can no longer achieve

its intended capabilities. For example, a suit that is torn during it use while

employed in multiple training exercises is required to be replaced with a new


36

or refurbished harness.

• Sustainment Maintenance;

Category of processes in which products are not inducted in the field at the end-

user’s site.

6. Modify configuration of hardware and/or software;

not driven by change to capabilities. This process is typically employed via

block upgrades, at a specific point in time, at a contractor or government

depot or on-site.

7. Repair catastrophic damage;

major accidents occur due to combat, training events, and the normal course

of activities. This process is only employed when the end-item can be

economically returned to a mission capable condition; all end-items are

assumed to be returned to inventory after such an event.

8. Store short/long term;

some Services will temporarily or permanently employ forwardly deployed

end-items which may not be utilized, but will require preventive maintenance

nonetheless. Currently no planned spare end-items are to be stored long-

term.

9. Reconstitute/Reset;

upon the return of deployed warfighters, their returning equipment is

inducted into a process that disassemblies the equipment, cleans and fixes

anything that is impaired and reassemblies the equipment. The objective is to

return the equipment to a condition that existed before the deployment.

Other processes are often combined with this process.


37

10. Retirement/Tooling Storage/Demilitarization;

this is an EOL process. As a result of an assumption of a 6 year production

life and a 10 year fielded life, this process occurs during a 6 year period.

The management of the oversight of the system life cycle was also included in the

study. The following 2 processes were recognized as requiring oversight “jointness”:

1. Product Support Manager [PSM]/Product Support Integrator [PSI]

PSE performance oversight;

an on-going process that assures that the PSE is meeting Am and affordability

objectives. This also requires:

• Annually refresh of Product Support BCA.

• PSE JIPT meetings.

2. Design engineering/configuration control/Test & Evaluation

[T&E]/quality control/logistics;

these various activities assure the integrity of the XYZ system as a system-of-

record. Without a centralized control across all end-user organizations, the

system could rapidly deteriorate into systems with a variety of revision levels.

The missions of the organizations employing the XYZ system are the following:

• Org1;

support specific missions

• Org2;

support specific installations

• Org3;



38

• Org4;


• Org5;

support specific missions.

In the BCA study, the OCONUS locations of end-users employing the XYZ system are

further segmented into: Pacific locations (i.e. Alaska, Hawaii, South Korea, Guam

and Japan), Europe locations (i.e. Germany, Italy, Turkey, Portugal and the U.K.)

and West Asia locations (i.e. Afghanistan, Kuwait, Saudi Arabia, Qatar, Oman,

Kyrgyzstan and UAE).

Appendix-12:a; provides tables that identify all the system’s known locations,

mission and quantities employed by each end-user organization. The data sets will

be updated as fielding schedules are confirmed.

This study identified the requirement of a supply demand fill rate level of 90% for parts

in order to achieve at least an 80% Am. The calculation for supply demand fill rate is:

[# of demands fulfilled when required]/[# of demands].

Note that the above performance metric is applicable to any demand for a supply to be

employed in any Product Support process.

Note that Am is a metric for the global population of end-items; this metric is not known

to be captured in a systemic basis by all the end-user organizations. It is the intention

of the PSM/PSI organization to capture this data.

The supply demand metric has the following characteristics:

• Demand-to-receipt cycle time: 5 weekdays

• 90% of time demand-to-receipt cycle time achieved


39

• Daily operating hours/Days per week/Days per year: 8/5/260

• Fill rate performance period: 12 months for all

• Metric calculation technique: Rolling average for all

There are obviously many alternatives to the above; this BCA study has identified

the above as “reasonable” to meet Am and remain affordable. XX has delivered a

study to the PM Office that indicates that an 80% Am will be achieved based upon

their estimated reliability calculations and other factors; XX estimated that Am will

exceed 90%.

Note that in case of an “event” requiring supply to be forwarded to a location,

strategic safety stocks will be positioned globally, with the assistance of suppliers.

The objective is to reach any location in the world within 8 hours. Cost allowances

have been included for situations which require expedited delivery to an end-user;

these “extra” costs have an immaterial upon TOC.

Another issue related to Am is that the duration between end-item events will be, in

most cases, quite sufficient to deliver any solutions required to convert a non-

mission capable end-item to one that is capable at the time of its next planned

event.

Weapon system “affordability” is currently being emphasized in every PM Office due to

the evolving DoD budgetary constraints. Defining “affordability” can come in many

flavors. This study defines “affordability” as assuring that the portfolio of future

expenditures requested for the O&S/M POM funding cycle are optimally allocated to

meet the Warfighter’s Am requirements, as well as to meet the Total Ownership Cost

[TOC] objectives for the weapon system. The Product Support affordability calculation


40

is based upon a targeted-cost-per-end-item-per-period for all applicable processes

employed during the period.

All estimated targeted costs are derived from Hypatia©, a Scenario-Based Product

Support Life Cycle Financial Planning software tool. Hypatia employs Cost Estimating

Relationships [CERs], a technique used to estimate a particular cost or price by using an

established relationship with an independent variable. If you can identify an

independent variable (driver) that demonstrates a measurable relationship with a

known cost, you can develop a CER; it can be mathematically simple in nature, such as

a simple ratio or it may involve a complex equation. Hypatia intertwines an Activity

Based Costing [ABC] technique with the CERs and employs mathematically simple

calculations.

ABC is a cost accounting method that measures the cost of specific activities. It assigns

cost to cost objects, such as products or customers, based on their use in activities. It

recognizes the causal relationship of cost drivers to activities. Cost drivers are assigned

for each Product Support process/activity. Cost drivers can include the number of

maintenance hours, the number of weapon system operating hours, and any factor that

can cause a change in the cost of an activity associated with a weapon system and its

support system. In addition, cost drivers affect direct and indirect costs and can be

linked to a cost object (i.e. an organizational division, a function, task, product, service,

or a customer). Indirect costs, however, are costs that cannot be directly linked to a

cost object.

The CERs employed have been accumulated over a 20 year period from a multiple of

sources: Security & Exchange Commission [SEC] data, trade journals, academic

publications actual experiences obtained by author, Subject Matter Expert [SMEs] and

other sources. A MS Excel workbook, the Hypatia© software product, with over 100

worksheets, provides the data sources for all the financial summary charts; see

appendix-j for Hypatia workbook (to be available upon final report delivery).


41

Reliability-based and usage-based demand item forecast assumptions were derived

from a large library of CER data sets obtained primarily from commercial sources;

mostly from public records of OEM financial reports, specifically the annual Security and

Exchange Commission [SEC] 10K Statement. These factors were employed as a

baseline for most cost targets. Below in Display 4b-1 is an example of these CER data

sets.

Display 4b-1

Note: In the CER above, sensors are twice as reliable as the overall commercial

equipment population; annual repair costs are .7% of a sensor’s value, versus a general

portfolio of products which is 1.4%

Also note that the DoD has corroborated the accuracy of the data sets employed in the

financial analytics of this study. Below in Display 4b-2 are outputs from the DoD

Display 4b-2

Funding Sources As A % Of Total Ownership Cost (TOC)


42

System

type

Product

R,D,T&E

[A]

Product

Procurement

[B]

Product

Operations

of O&M/S

[C]

Product

Maintain/

Sustain of

O&M/S

[D]

Product

Maintain/

Sustain as a

% of

Procurement

[D÷B]=[E]

Avg. Years

of Product

Life

[F]

Annual Product

Maintain/

Sustain $$ as a

% of Procure.

[E÷F]=[G]

Fixed wing

fighter 9% 30% 21% 40% 130% 25 5.2%

Ground

system 4% 24% 28% 44% 180% 25 7.2%

Rotary

wing 6% 29% 17% 48% 165% 25 6.6%

Surface

ships 1% 31% 30% 38% 120% 35 3.4%

Director of OSD Cost Assessment and Program Evaluation (CAPE) [formerly Program Analysis &

Evaluation (PA&E)] report to Congress June 2009; interpolation.

The chart in Display 4b-3 is an illustration on how reliability data sets were established

for the study.

Display 4b-3

COTS Reparable Item

Annual Field Maintenance Cost Due To Failure

Variable Description Value

A Reparable item value $1,000

B Average cost of repair as a % of item value inclusive of field maintainer labor 20%

A*B=C Average cost of repair $200

D CER annual maintenance expenditures as a % of item value (item

sustainment maintenance/depot & field maintainer labor) 4.0%

A*D=E Commercial annual maintenance expenditure per year per item $40

F Commercial baseline OPTEMPO; hrs of use/yr 600

G Military OPTEMPO; hrs of use/yr 400

H Military hostile environmental factor weight 1.25


43

COTS Reparable Item

Annual Field Maintenance Cost Due To Failure

Variable Description Value

G*H=I Military weighted OPTEMPO 500

(I/F)*E=J Military annual maintenance expenditure per year per item $33

J/C=K % of items that will fail in any one year 16%

Note: Activity Based Costing [ABC] is the preferred approach at estimating the life cycle

Product Support cost of a weapon system; Operating and Support Cost Management

Guidebook (Draft) March 2012.

In the costing of failures, the graph below in Display 4b-4 was the technique employed.

Note that for products that were modified, reliability characteristics were reinitialized to

the baseline; all non-modified products continued to deteriorate annual. The rate of

reliability deterioration was 1.5% per year compounded.

Display 4b-4

Display 4b-5 is a schematic illustrating the detailed elements of the estimated baseline

target cost.

Display 4b-5

Failure Rate

Product Baseline

Mod Mod

No Mod

Time


44

c. Evaluation Criteria

The study attempts to optimize cost, Am “jointness” and unfavorable risks throughout

the life of the weapon system. Means to optimize costs were discussed during the BCA

IPT sessions, as well as with Subject Matter Experts [SMEs]. The following analytic

elements, some more than others, were applied to the financial analysis, as well as the

alternative analysis and the risk analysis: quantitative/qualitative values, scoring and

weighting, rank ordering/prioritization and sensitivity analysis.


45

5. Alternatives

5a: Current Baseline/Anticipated Initial Support/Status Quo

The Product Support life cycle cost baseline was driven by commercial factors that were

modified to reflect the various elements of a military environment. Due to the high

COTS item content of the XYZ system, and the availability of accurate commercial

Product Support data sets, the author primarily employed commercial data bases for

estimating target costs.

5b: Alternatives

This study’s focus upon alternatives was to analyze selective elements employed in the

business model of each PSE solution. Each solution was comprised of the following:

• The processes employed by a PSE.

• The product inducted by the process.

• The maintainability (i.e. field reparable) of the product.

• The source-of-design of the product.

• The volatility of the life of the product.

Below are descriptions of the primary alternatives business model elements analyzed.

Note that not all alternatives were reviewed; many were eliminated due to the

recognition that a specific alternative was not viable for a solution, either on an

efficiency or effectiveness basis.

Preferred alternatives were selected based upon the lowest variance from the target

cost, as well as risk factors.

Select an alternative business model element for the Supply Chain

Management [SCM] transactions that deliver parts to be employed in a

Product Support process.

Below are the six types of alternative SCM transactions that were considered in the

study for each solution requiring a SCM strategy. As discussed previously, the term


46

“impaired” is applied for items that cannot be employed in a mission and “non-

impaired” is applied for items that can be employed in a mission. Note that they are

applicable for every Product Support process employed throughout the life cycle of the

XYZ system:

1. Sale;

government or contractor supplier ships non-impaired item to customer. No item

is planned to be returned by the customer to the supplier. Disposal is performed

by the customer.

2. Dispose;

government or contractor supplier ships non-impaired item to customer.

Impaired item is to be returned by the customer for review, analysis, destructive

testing and disposal.

3. Supplier Forward Like Kind Exchange [SF/LKE];

a non-impaired reparable item is shipped to a customer from a rotable pool by a

government or contractor supplier. The customer ships its impaired item to the

supplier. The impaired item is inducted into a renewal/repair process and is

converted to a non-impaired condition. The non-impaired item moves to a

rotable pool to fulfill a future demand.

4. Customer Forward Like Kind Exchange [CF/LKE];

the customer ships its impaired item to the government or contractor supplier.

Upon the receipt of the impaired item, the supplier ships a non-impaired item

from a rotable pool. The impaired item is inducted into a renewal/repair process

and is converted to a non-impaired condition. The non-impaired item moves to a

rotable pool to fulfill a future demand.


47

5. Loan, Renew & Return [LRR];

the government or contractor supplier ships a non-impaired loaner item, from a

rotable pool to a customer. The customer ships the impaired item to the supplier.

The supplier converts the customer's impaired item to a non-impaired condition

and returns the same item back to the customer. Customer in turn returns the

non-impaired item loaner back to the supplier who in turn inducts the item into a

rotable pool after inspection.

6. Renew & Return [RR];

the customer ships impaired item to government or contractor supplier. The

supplier converts customer's item to a non-impaired condition and returns the

same item back to customer.

Select the one alternative of the Product Support solution business model

element that encompasses stocking policy, storage and ownership of parts

for field/retail, intermediate/regional and centralized/wholesale levels.

This alternative is driven by: inventory investment levels, indirect costs to manage parts

investment and parts availability to the customer. The following three factors impact

this element:

1. Parts storage echelon and stocking policy;

the locations where parts are positioned for distribution to a customer. Anyone of

the following 8 Product Support parts government or contractor supply

distribution scenarios in Display 5b-1 below can exist to fulfill a customer

demand. Note that there are other scenarios that can be developed as well. The

category of the stocking policy of “transfer only” indicates that the facility exist

primarily for transportation efficiencies in which parts shipments are consolidated

in order to move to the next supply echelon.

Display 5b-1


48

Alt

ern

ativ

es

Parts Storage Echelons & Stocking Policy Alternatives

Wholesale/ Centralized Intermediary/Regional Retail/Field

Sto

re

Tran

sfer

on

ly

Ech

elon

not

pr

esen

t

Sto

re

Tran

sfer

on

ly

Ech

elon

not

pr

esen

t

Sto

re

Tran

sfer

on

ly

Ech

elon

not

pr

esen

t

1 x - - - x - - - x 2 x - - x - - - - x 3 x - - x - - x - - 4 - x - - x - - - x 5 - - x x - - - - x 6 x - - - - x x - - 7 - - x - x - - - x 8 - - x x - - x - -

2. Parts storage;

who owns the stocking facility and who manages the facility. Display 5b-2 below

provides the six potential scenarios that can be employed by a PSE. Many of

these alternatives were considered when crafting the recommended PSE.

Display 5b-2

Parts Storage Alternatives

Alternative

Warehouse Owner

Warehouse Management

Govt. Contractor Govt. Contractor PPP

1 x - x - - 2 x - - x - 3 x - - - x

4 - x x - - 5 - x - x -

6 - x - - x

3. Part ownership;

who owns what and where. Each alternative can have a major impact upon


49

affordability, especially in a COTS environment where products have very low life

durations. The obsolescence issues for high-priced items in inventory have the

greatest impact upon the TOC of the XYZ system. Display 5b-3 identifies the

business model element alternatives available to the PSE.

Display 5b-3

Parts Ownership Alternatives

Alternative Wholesale/ Centralized Intermediary/Regional Retail/Field

Govt. Contractor Govt. Contractor Govt. Contractor 1 x - x - x - 2 - x x - x - 3 - x - x - x 4 - x - x x -


element that encompasses the management and ownership of depot

facilities employed in Sustainment Maintenance processes.

The Sustainment Maintenance processes of reconstitute/reset, modifications,

catastrophic damage repair, reparable renewal/repairs and long-term storage all require

facilities that stage, induct and deliver weapon systems and their reparable items. Title

X requires that Governmental depots review their ability to perform Product Support

processes for any new weapon system.

For the XYZ system, no COTS items were deemed available to be sustained in a

government depot; Technical Data Package [TDP] ownership and economically viable

test equipment acquisition were the primary drivers for depots not qualifying for

sustainment work. Display 5b-4 is a chart of the alternatives depot facilities that could

be employed for Sustainment Maintenance processes

Display 5b-4

Depot Sourcing Alternatives

Alternative Depot Owner Depot Management


50

Govt. Contractor Govt. Contractor PPP*

1 x - x - - 2 x - - x - 3 x - - - x 4 - x x - - 5 - x - x - 6 - x - - x

*Public Private Partnership


element that encompasses the key source-of-personnel resources employed

in processes.

Government Personnel Resources:

• PM Office.

• Life Cycle Management Commands [LCMCs]

o Inventory Control Point [ICP].

o Depots.

o Field Service Representatives [FSRs].

o Others.


• Transportation Command [TRANSCOM].

Contractor Personnel Resources:

• Original Equipment Manufacturer [OEMs] internal product distribution

organization.

• OEM internal Product Support renewal/repair organization.

• OEM internal Product Support parts distribution organization.

• Suppliers to OEMs.

• Authorized OEM distributors.

• Independent parts distribution organizations.

• Independent renewal/repair organizations.

• Third Party Logistics [3PL] organizations.

• Application software product companies.


51

• Leasing companies: transport vehicles, facilities, equipment.

• System Engineering & Technical Assistance [SETA] providers.

Note: Public Private Partnerships [PPPs] and Limited Liability Corporations [LLCs] can

combine some of the above resources.

Reviewing the alternatives for “jointness” was also analyzed. Below are the three areas

in which jointness was reviewed:

1. Do any of the end-user organizations currently have a relationship with any of

the suppliers for this solution?

Having one PSP develop a supplier relationship is more efficient than each end-

user organization establishing their own relationship with the same supplier.

2. What % of the solution delivered is a traditional/organic approach?

The less traditional, the more centrally managed/joint required. Note for

improving affordability, “out of the box” solutions should be employed.

3. What is the volatility level of technology change for items employed in the BOM?

The greater the volatility, the more “jointness” required to control configuration

oversight and deal with the OEMs.


52

6. Mission and Business Impacts

6a: Jointness Challenges

This system poses many challenges for reaching joint solutions. The CONOPS of each

Service and their missions are highly varied. They are made-up of the following:

• Deployable end-items employed in garrison training.

• Deployable end-items employed in non-DoD exercises.

• Deployable end-items deployed.

• Non-deployable schoolhouse training.

• Stored deployable end-items.

In order to propose to PM Leadership any joint solutions, much give-and-take had to be

undertaken by the JIPT to craft such solutions.

6b: Benefits and Non-Financial Analysis

The benefit analysis section focuses upon the non-monetary factors influencing the

conclusions and recommendations of the BCA. The JIPT assessed the following factors

to be of importance:

• Create trust among all the end-user organizations to assure that the estimated

280 end-item sites will be adequately provided with Product Support solutions.

• Assure that the configuration/revision level of sensors is determined to be as

close as possible to state-of-art levels. All the end-user organizations currently

have some of the sensors employed in the XYZ system, but they are engaged in

different missions. End-users of the XYZ system do not want to be in a situation in

which their colleagues have sensors that are “better’ than that employed in the

XYZ system.


53

• As a system of record, each end-user organization is required to assure that their

property books track each end-item individually. The Org1, Org2, and maybe the

Org5, will be redistributing the individual items in the XYZ system into a parts

storage facility; though the physical XYZ system will no longer be one entity, a

virtual XYZ system configuration must be controlled for audit purposes. It is the

belief of the author of this study that this will be a challenge for all concerned;

this is a non-standard approach to positioning a weapon system of record.

• The management of ensembles is divided between new condition items and not-

new condition items. How inventories are balanced between the two conditions is

of extreme importance to field commanders; not-new items cannot be used in an

actual event, while not-new can be employed in a training event. Below in

Display 6b-1 is a chart in which each end-user organization can choose an

approach to stock new and not-condition ensemble items. Scenario #1 is the

least costly, with Scenario #3 more costly than Scenario #1 and Scenario #2

being the most costly. It is the recommendation of this author that active

discussions should be engaged with each end-user organization regarding the

scenario they wish to choose. Note that for the recommendation of this study,

Scenario #1 has been chosen; life cycle cost adjustment will be required for the

employment of other scenarios.

Display 6b-1

Ensemble Scenarios

Scen

ario

Ensemble On-System Ensembles Off-System

(Class IX part) at User Site

Distribution

Not-New Condition

New-Condition

Not-New Condition

New-Condition

Periodic planned

replacement of outfits:

On-demand:

Critical Event:

1 x - - - new or not-new condition

new or not-new

condition

new condition


54

Ensemble Scenarios

Scen

ario

Ensemble On-System Ensembles Off-System

(Class IX part) at User Site

Distribution

Not-New Condition

New-Condition

Not-New Condition

New-Condition

Periodic planned

replacement of outfits:

On-demand:

Critical Event:

2 - x x - new or not-

new condition rotated

new or not-new

condition N/A

3 x - - x new or not-

new condition rotated

new or not-new

condition N/A

6c: Cost and Financial Analysis

Once the alternatives of the business model elements of the Product Support solutions

are selected, then the completion of the business model for the solution can occur.

Below are some of the key elements of the Product Support solution business model

that were common across all solutions.

Define the funding streams to the PSE.

In order for a Product Support BCA to be viable as a recommended path-forward for the

PSM/ILS Lead, funding sources must be defined for delivering all the solutions

throughout the life of a weapon system. Funding elements were identified for the

following life cycle segments:

• First year of an end-item fielding;

a no-cost product manufacturer warranty coverage will be employed for

reliability driven events. Warranty administration will be the responsibility of the

PM Office under an acquisition funding overhead expenditures. If there is no

manufacturer warranty coverage for a reliability driven event, the PM Office has

stated that it is committed to fund those expenditures. For non-reliability driven

events, the PM will also provide funding.


55

• Second year of an end-item fielding;

the PM Office has committed employing its funding sources to cover all

expenditures.

• Third year and beyond of an end-item fielding;

the end-user organizations will submit a POM for maintenance costs and

distribute funding to the PM Office to manage the recommended JPSP and the

remainder of the end-user organization’s POM funding is employed for non-JPSP

covered items.

Define the key management activities of each process employed by the PSE

that enable a value proposition to be delivered to the customer.

The following activities impact the delivery of the value proposition to the customer;

with each having a different weight upon each Product Support process. Note that

direct technical labor/maintainers are not considered to be an important resource

employed by the XYZ system PSE for field maintenance processes. The PSI must assure

that each Product Support solution has resources employed to manage the following

business model elements:

• Replenishment planning management;

this entails the forecasting of demands, lot sizing, lead time estimates, safety

and cycle stock level management and other tasks. If poorly managed, inventory

investments can become unaffordable and line item fill rates can be

unacceptable.

• Sourcing management;

the primary risk in this area is that the COTS items supply chains can become

“cold” due to DMS/MS and EOL issues, resulting that at times there must be a

shift from the acquisition of supply to the repair of supply, even though the item

was not originally intended to be repaired. This often leads to a paradigm shift in


56

Beyond Economic Repair [BER]/washout rate calculations.

• Reverse supply chain management;

this is primarily related to reparable parts and like-kind exchange and loaner

transactions. The key aspects of this activity is the cycle time of a customer

shipping a unit back to the supplier, the amount of time to renew/repair the item

and the time it takes to induct the part into a rotable pool. The poor

management of this activity often leads to an explosion in the inventory

investment of reparable parts in order to meet system availability objectives;

known as “feeding the fire.”

• LRU renewal/repair management;

again this is related to reparable items. It covers the management of the product

induction planning and flow at a government or contractor depot. The challenge

most encountered in this area is the issue of Beyond Economic Repair

[BER]/washout criteria. Traditionally Contract and Government Inventory Control

Point managers have employed a 65% repair cost threshold factor for BER; if

repairs are to exceed an estimated 65% of the Current Replacement Value

[CRV], the item is to be disposed and a new condition item is to be obtained.

BER analysis is quite different for COTS items; BER thresholds can be as low as

25% due to the extensive availability of reconditioned items in the commercial

market. Further details on this topic can be discussed in another venue. The net

result is that the PSE has many opportunities to improve affordability by

aggressively managing the BER COTS issue.

• Customer demand management;

providing a means to routinely receive parts orders, as well as to fulfill unplanned

demand requirements. It is the intention of the recommended JPSP to be a key

factor in this area; the JPSP will have a frugal demand management


57

infrastructure to manage its small population of items. It will be the role of the

PSM/PSI to oversee that all demand data sets are accurately captured in order to

be employed in analytics, such as parts forecasting.

• Transportation management;

the physical movement of items to and from the echelons of supply. The key

factor for this activity is movement cycle time. There is a balance between

focusing upon the efficiency of this activity, such as shipment consolidation,

versus the effectiveness of this activity, such as employing air transport versus

ground transport. The key driver for optimizing the balance of efficiency and

effectiveness is good supply chain management planning. A ratio of 95% of the

shipments being routine and 5% expedited is a benchmark metric for identifying

optimized transportation management.

• Storage management;

focus upon the control of supply record accuracy. Physical supply management,

such as warehouse material movement, is often not an issue of concern, but part

number and quantity accuracy is critical for item planning and ultimately the

stability of the management of the supply chain. An aggressive cycle counting

program, for a select group of mission critical items, should be implemented; this

is one of the lowest costs initiatives to reduce the risk of destabilizing the

management of the supply chain. Note that all items above a value of $5,000 will

be tracked by serial number; a rule of thumb is that these select cycle counted

items should be reviewed at a minimum of two times per year.

• Condition & configuration control management;

a critical activity for very-low life duration COTS items. These items are

continually being modified, hardware and software, in the OEM’s new condition

production processes; some modifications are not material to the Test &

Evaluation community, but others are germane. Engineering Change Proposals


58

[ECPs] must be filed when the item acquisition or the item renewal/repair results

in a change in configuration or revision level. This area will be challenging for the

PM Office.

As for item condition control management, there are many key items, especially

ensembles, which require conditions to be tracked. An example is the condition

of ensembles that are not-new, being applied for training, but they cannot be

employed in a “real” event requiring new condition ensembles.

Define the key resources that are required to be employed in the processes

by the PSE.

These are resources that are viewed as being of greatest value to the PSE in being able

to manage its processes efficiently and effectively.

• Information Technology [IT] Supply Chain Management [SCM]

software;

a critical resource for the PSE’s effectiveness and efficiency in managing Product

Support processes. Each of the Services has enterprise systems to manage their

supply chain. Most of the application software products employed for Product

Support processes have many challenges: code that only fulfills the partial

requirements of the user, poor training and/or high turnover of users, decoupling

of financial data applications with that of operational applications and much

more.

A robust audit of application software, both of that of the Government and

contractors, will be needed to ensure that the PSE has the ability to meet its Am

and affordability targets

• Data information;

this is the lifeblood of the IT SCM application software. Capturing all significant

data sets, and the validation of their accuracy, is of utmost importance for the


59

PSE; this is an area of great vulnerability for the PSE. As little as a 5% inaccuracy

of data sets can materially unfavorably impact decision making derived from the

application software.

• Item Management personnel;

these are key individuals in minimizing a volatile supply chain. The personnel

involved in this activity, at least for key items, must have the ability to perform

dependent demand forecasting, have technical knowledge and have financial

wherewithal. Key personnel in this function should be vetted by the PSM/ILS

Lead and the PSI to assure the optimum effectiveness and efficiency of the

processes that they are responsible to manage within the PSE.


60

7. Risk Analysis and Mitigation Plans

7a: Risk Analysis

The following 20 risk elements could materially change the output of the BCA study.

Each was considered in configuring the recommended PSE.

1. Mission and CONOPS:

When there is a mission or concept of operations change, the effect on the

program is all-encompassing. An advocacy change can be the stimulus, as can

the prospect of a conflict in a new geo-political environment.

2. Capability Definition:

Change in requirements.

3. Change in Strategic Vision:

Strategic vision tends to change slowly. The horizon is usually 5-20 years. If the

XYZ system time horizon was to change from 16 years to 25 years, major impacts

on TOC would occur.

4. Technology Capability Insertions:

Could dramatically change entire PSE construct requirements.

5. Interdependency:

Program interdependency with GOTS items from either other programs, or

originating from the XYZ system, could impact aspects of the PSE.

6. Interoperability:

Often a system is required to interoperate with another system developed

independent of another program. Changes in one of the interdependent


61

programs could affect the XYZ system PSE in such areas as supply chain

management.

7. Functional Solution Criteria:

If KPPs are changed, there would be a cascading impact upon the entire BCA

study conclusions and recommendations.

8. Funding:

If current funding for joint Product Support initiatives are changed, major

economies of scale would be reduced, resulting in the increase of the TOC.

9. Program Management and Contractor Relations:

If current relationships do not remain efficient and effective, between Contractor

XX and the PM Office, then opportunities for increased Product Support costs

exist; from configuring the PSI Office to increases in data calls.

10. Program Social Structure and PSE Development Environment:

A future deterioration in the BCA JIPT will have a major impact on the ability to

optimize jointness of the PSE.

11. Program Management Structure and Manning at Program Office:

Many of the same individuals have been involved in the Product Support BCA

initiative over the last 3 years; their turnover would result in the loss of a great

amount of the Body of Knowledge [BOK] of the PSE construct decision drivers.

12. Supply Chain Vulnerabilities:

Parts reaching EOL, sole-source relationships, supplier mergers/acquisitions and

many other factors can make it difficult to maintain timely access to critical parts

and supplies.


62

13. Program Office Schedule Performance:

Delays in developing a PSI would require certain assumed PSE efficiencies and

effectiveness to be compromised.

14. Production Quantity:

Changes in production quantities exposes the program to many consequential

changes; to economies of jointness, to price paid for parts and many others.

15. Data Ownership:

Any unanticipated conflicts of Intellectual Property [IP] rights could cause major

challenges during the Test & Evaluation [T&E] process; access to technical

manuals and other areas could be impacted.

16. Contractor Delivery Performance:

Fielding schedules can impact the development of the PSE and its employment of

resources; with over 280 end-item sites, this element could be extremely

disruptive.

17. Advocacy Change:

Advocacy changes occur when the potential value of the program diminishes or

increases relative to the advocate’s constituency. A senior officer may drop his

advocacy when he believes other sponsors will not address concerns of his

Service or because he/she believes their concerns are already addressed by the

program and the funding is needed elsewhere. With the current budget

challenges, this element is a very real concern that could change the scope of

the PSE.

18. Information Sharing Between Services:

Failure to share sufficient and accurate information between the PSM/PSI/PSPs


63

and the Services is fairly common and can create significant problems in SCM.

19. Industry Changes:

It is likely that key technologies employed in the XYZ system will rapidly evolve

resulting in increased capabilities and efficiencies. Industry consolidation will also

occur, resulting in less suppliers and in turn less choices in suppliers to negotiate

prices for item repairs and acquisition.

20. Test & Evaluation [T&E] Processes:

Applying traditional Developmental Item [DI] T&E processes could dramatically

delay the implementation of configuration changes for Commercial Off The Shelf

[COTS] items; the commercial world doesn’t wait for DoD to “approve” changes.

7b: Mitigation Plans

All the risks discussed in section 7a can be grouped into the following 7 categories:

1. Business/Programmatic:

Risk of undesirable consequences that affect the program’s viability, affordability,

and budget.

2. Operational:

Risk to the Warfighters’ ability to perform the mission as planned.

3. Process:

The potential for undesirable Product Support process performance that could

cause failure to meet the anticipated performance or standards.

4. Technical:

Risk associated with technologies that may render an alternative of little value.


64

5. Schedule:

Risk associated with time allocated for performing the defined Product Support

processes.

6. Organizational:

Risk associated with difficulties in implementing a change within an organization

employed by the PSE.

7. Sustainability:

Risk associated with implementing short term fixes that will cause problems in

the future; arsonist/fireman syndrome. Processes employed must be repeatable.

There are two primary approaches that were employed at mitigating the majority of the

risks above:

1. Establishing a PSE:

the construct of a PSE institutionalizes the management of risk mitigation. With

the PSI Office being accountable for assuring overall system performance for

Product Support processes, the PSM has “one button to push” when performance

“goes south.” Coupled with contractor suppliers having financial incentives for

superior performance, many risks would be identified sooner rather than later.

2. Delivering a BCA study:

the construct of a Product Support BCA study is configured to be continually

updated in a highly efficient manner, which enables the PSM/PSI Office to

“effortlessly” perform simulations to better understand the impact of changes

upon target costs and Materiel Availability throughout the life cycle of the

program.


65

8. Sensitivity Analysis

Given the construct of the Hypatia software tool, virtually any what-if sensitivity analysis

can be performed that impacts target costs. The 11 scenarios selected below in Display

8-1 were primarily chosen by the JIPT; the objective was to identify major and minor

cost drivers in order to focus discussions that would materially impact the outcome of

the BCA.

Display 8-1

Sce

nari

o #

What-If Sensitivity Analysis

Life Cycle Cost Change

Impa

ct

% Estimate Cost ($M)

1 Increase product modification frequency by 20% (i.e. Every 5 years to every 4 years) + 6.5% $18.7

2 Increase fielded period by 4 years (i.e. from 10 years post-fielding to 14 years) + 46.2% $133.5

3 Decrease response rate to fulfill Field Maintenance demands from 90/95% to 80/85% - 0.4% $1.1

4 Increase manufacturer's warranty from 1 year to 2 years - 0.1% $0.3

5 Increase annual CPI initiative from 2.5% to 3.0% - 2.9% $8.3

6 Increase Org1A annual garrison training frequency from 8 to 12 times per year + 6.0% $17.4

7 Increase annual Org2 schoolhouse training frequency from 10 classes to 15 classes + 0.3% $0.7

8 Increase # of systems fielded by Org5 by 20% (i.e. from 100 units to 120 units) + 6.3% $18.1

9 Acquire and store an additional 20% systems (i.e. buy 80 additional units from original 400 units and

place in long-term storage) + 6.0% $17.2

10

Decrease frequency of replacement of ensembles employed for all training activities by 20% (i.e.

replace every 10 events, instead of every 8 events)

- 8.0% $23.2

11 Modify all hi-tech fielded sensors every three years; block upgrade + 14.2% $41.2

12 Field an additional 188 end-items for Org3 + 17.9% $51.7


66

9. Conclusions

9a: Selection of Preferred Alternatives for Each PSE Solution

Appendix b has the detailed conclusions.

9b: Financial Summary of the Results

Appendix c has the summaries.


67

10. Recommendations

10a: Specific Actions Based On Business Objectives

Create a Joint Product Support Provider [JPSP] to manage outfits, sensors/meters (hi-

tech only) and computer/application software. Display 10-1 provides a schematic of the

activities to be performed by the JPSP.

Display 10-1

The estimated annual targeted cost for the JPSP solution, exclusive of parts and

maintenance labor, is 4% of the annual targeted Product Support life cycle cost. The

JPSP would manage an estimated 78% of the overall Product Support life cycle costs.

Note that many of the products to be supported by the JPSP currently exist in each of

the Service’s product inventory. There may be challenges for the JPSP concept for some

of these products. One of the questions is how is each Service to decouple their Product

Support CONOPS for the same item that is employed in the XYZ system and those that


68

are non- XYZ system items?

One potential means of eliminating the conflict between managing the same products

that are found in XYZ system and as stand-alone products, with similar missions, is to

have the end-user organization take their stand-alone products and deliver them as a

Government Furnished Equipment [GFE] as part of XYZ system. For example if an

ensemble in XYZ system is configured with a quantity of 8, and other missions employ

the same ensemble outside of XYZ system with a quantity of 20, XYZ system would be

configured with a quantity of 28; a quantity of 8 would be acquired by XYZ system PM

Office and 20 would be provided as a supplement package that would be part of the

XYZ system configuration. This concept would require much discussion on whether it is

a viable option to consider.

Display 10-2 provides a recommended listing of those products to be supported by the

JPSP.

Display 10-2

JPSP Supply Chain Management [SCM]



App

licab

le

to J

PSP


Org

1

Org

2

Org

3

Org

4

Org

5

Sensors/ Meters

A a 1 1 0 0 1

B b 2 2 0 2 2 X

C c 2 0 0 2 2 X D d 6 15 0 6 1

E e 2 2 0 2 4 X

F f 1 4 0 0 2

G g 4 6 4 6 4

H h 5 5 5 5 5 X I i 1 2 1 1 1


69




App

licab

le

to J

PSP


Org

1

Org

2

Org

3

Org

4

Org

5

J j 2 4 2 6 2 Electronics

A a 1 2 0 1 2

B b 2 2 0 2 2 C c 2 2 2 2 0

D d 8 15 0 3 12

Electrical A a 1 1 0 0 0 B b 1 1 0 0 1 C c 6 6 1 0 6 D d 1 1 2 0 2

E e 1 1 0 0 1

Mechanical

A a 1 1 0 0 1

B b 7 7 6 0 0

C c 1 1 0 0 1

D d 2 2 2 0 2

E e 8 8 6 6 12 F f 8 8 6 6 12 G g 2 2 2 0 2

H h 1 1 0 0 1 I i 1 2 1 0 1

Structure A a 2 3 0 0 0 B b 0 0 2 2 2

Hardware/ Soft goods A a 8 8 3 0 6 B b 1 1 1 1 1

C c 8 8 8 8 16

D d 2 3 2 2 2 E e 1 0 0 0 1 F f 4 6 0 2 4 G g 2 3 2 2 2 H h 2 2 2 2 2


70




App

licab

le

to J

PSP


Org

1

Org

2

Org

3

Org

4

Org

5

I i 2 2 2 2 2 Ensembles

A a 8 22 6 6 12 X B b 8 22 6 0 12 X C c 8 22 6 6 12 X D d 8 8 0 0 0 X E e 8 22 6 0 12 X

Application Software

A a 1 1 1 1 1 X

Some of the features of the CONOPS for the JPSP are the following:

• Each CONUS hub will have a dedicated team of two individuals who will have

their inventory in a tractor trailer providing supply for all life cycle Product

Support processes.

• The hub teams will access the commercial distribution channels of the COTS

suppliers for most of their supply. As a result, little initial provisioning inventory

will be required to be owned by the end-user organizations.

• The hub teams will have a scheduled route, based upon training events of the

end-users networked by the hub. The vast majority of events employing end-

items will be planned weeks in advance.

• The hub teams will be the “eyes and ears” of the PSI for data collection and

customer relationships.


71

• The hub teams will reset the inventory of ensembles based upon changes in

personnel assignments.

• All end-users for each hub network will be no further than 8 hours by vehicle and

1.5 hours by aircraft from their designated hub; covers 95% of end-users.

• For the Org3 and Org4, where the XYZ system end-items will be disassembled into

products, a virtual configuration control management must be in place by these

end-users. The hub team will be auditing the accuracy of the configuration

management in order for the PM Office to assure the configuration integrity of all

the end-items of this system of record.

• The hub team will coordinate all modification programs with the end-users. The

objective is to minimize the modification program’s impact upon Am.

• The hub team will perform all application software upgrades and fixes on the

notebook computer.

• The hub team will assure that new-condition outfits required for a “real” event

are available to be rapidly delivered to an end-user, if required.

• The hub team will provide solutions, on a case-by-case basis, to complement the

efforts of the end-user organizations for items that the hub team is not

accountable to support.

• The hub teams will be coordinated on a global basis through the PSP reporting

directly to the PSI.

There are many other aspects to the JPSP that are still in development. OCONUS hub

CONOPS is still in development; about 10% of demand will be generated from OCONUS


72

end-users. The OCONUS hubs would not be a full time enterprise, given the small end-

item population.

The remaining 22% of the life cycle costs include both product maintenance processes

and the PSI Office. Excluding the PSI Office, an estimated 4%, the remaining 18% of

life cycle costs would be managed by each end-user organization employing their

current organic infrastructure. Note that for many of the products in the XYZ system, the

end-user organizations have existing Product Support solutions. One of the objectives of

the BCA study was not to create a parallel infrastructure for the XYZ system, when one

already exists. Though the non-JPSP items constitute a small percentage of the life

cycle costs, they make-up over 85% of the items employed in the Product Support

processes.

Below in display 10-3 is the estimated cost per end-item per year per Service for the

JPSP.

Display 10-3

Joint Product Support Provider [JPSP] Costs

JPSP Cost Per Service Per Year When Fully Fielded

Annual Cost-Per-End-Item

Service CONUS OCONUS Total CONUS OCONUS Org1 $381,510 $37,076 $418,586 $1,870 $3,090 Org2 $435,244 $36,270 $471,514 $8,060 $12,090 Org3 $49,435 $19,344 $68,779 $3,531 $4,836 Org4 $89,735 $53,196 $142,932 $855 $1,400 Org5 $19,076 $0 $19,076 $1,734 $0 Totals $975,000 $145,887 $1,120,887

In Display 10-4 below, the distribution of the life cycle costs of Service performed

activities versus those that are jointly performed is analyzed.

Display 10-4

Joint Versus End-User Organization Activities


73

Line# Cost Drivers

Life Cycle Cost ($millions rounded)

% of Total

* ** ***

Total Org

Joint

JPSP PM

1 Correct failure; convert impaired item to non-impaired item $4.9 $6.2 $0.0 $11.1 3.8%

2 Correct minor damage; fix only that which is damaged $0.4 $1.0 $0.0 $1.4 0.5%

3 Replace shrinkage (i.e. lost during training event) $1.5 $1.7 $0.0 $3.2 1.1%

4 Perform period-based testing or calibration (i.e. every .5 years) $1.4 $1.8 $0.0 $3.2 1.1%

5

Perform use-based renewal/ replacement (i.e. rebuild upon every 200 hours of operation, replace every 100 training events)

$26.8 $105.4 $0.0 $132.2 45.7%

6 Modify configuration of hardware and/ or software; not driven by change to capabilities. Sustainment block upgrade

$0.0 $93.6 $0.0 $93.6 32.4%

7 Repair catastrophic damage of end-item $12.9 $0.0 $0.0 $12.9 4.5% 8 Store end-item short/long term $0.3 $0.0 $0.0 $0.3 0.1% 9 Reconstitute/Reset end-item $5.5 $0.0 $0.0 $5.5 1.9%

10 Retire/Demil end-item/Preserve Unique tooling $1.9 $0.0 $0.0 $1.9 0.7%

11 PSM/PSI PSE Oversight Office $0.0 $0.0 $8.0 $8.0 2.8%

12 Design engineering/Configuration control/T&E/QC/Logistics $0.0 $0.0 $4.0 $4.0 1.4%

13 Joint Product Support Provider [JPSP] indirect $0.0 $0.0 $11.8 $11.8 4.1%

14 Totals $55.7 $209.7 $23.8 $289.2 100.0% 15 % of Total Totals 19.3% 72.5% 8.2% 100.0% 16 *POM funds stay within each end-user organizations 17 ** POM funds transferred by end-user organizations to JPM for JPSP direct and indirect costs 18 ***POM funds originate from PM Office

10b: Implementation Plan

JPSP Start-Up

It is estimated that the JPSP would take 12-18 months to become operational in

CONUS, with OCONUS taking a bit more time. The activities that would be required to

be performed are the following:


74

• Buy-in by each of the end-user organizations; opt-out would be the leadership

choice of an end-user organization Service.

• Identifying the optimal hub locations based upon the network of end-users.

• Select the source of the JPSP; government, or contractor or PPP. Note that the

organization that can deliver the solutions closest to that of the target cost will

become the most likely JPSP source. XXX Life Cycle Management Command

[LCMC] is ultimately accountable for the Product Support of this weapon system.

• Develop relationships with all the item suppliers.

• Initialize hubs: facilities, equipment, personnel, materials, data/voice/video

infrastructure.

• Develop relationships with end-users.

• Develop relationships with Logistics services suppliers.

• Develop relationship with PSI.

PSI Office Start-Up

This small organization of 2 to 3 Full Time Equivalents [FTEs], plus professional

services, will cost about $1,200/end-item per year to fund or about 2.5% of total life

cycle costs. The PSI Office is the main driver for Continuous Process Improvement [CPI]

initiatives; it is expected to reduce end-item costs by an average of about $10,000 to

$12,000/end-item per year or a 800% to 1000% ROI in standing-up a PSI to achieve a

19% targeted cost reduction.


75

It is estimated that once a source is identified to manage the PSI office it will take 6-9

months to make it operational. The PSI Office should be in-place upon the first XYZ

system end-item fielding.

The activities required to make the PSI Office a reality are the following:

• Obtain funding for office; submittals during multiple POM cycles will be required.

• Select a source to manage the PSI Office; can be government or contractor. It is

the PSM who selects the source. See Appendix h for a 100 element questionnaire

that will assist the PSM to select a source.

• Initialize office: facilities, equipment, personnel, materials, data/voice/video

infrastructure.

• Develop relationships with all PSPs.

• Develop relationships with the XYZ system engineering, configuration, logistics

and quality management team.

• Develop system performance reporting system for delivery to PSM and PM.

• Construct a Product Support BCA study analytic tool that can be employed in a

repetitive manner throughout the life of the system.

There are many other issues to be addressed for a PSI Office start-up. One of the

greatest challenges is to obtain “quality” personnel who “get it” regarding managing the

oversight of Am and affordability; not the typical skills of logistics professionals.


76

11. Open Items

The analysis above covered most PSE issues, but there are several additional decisions impacting the JPSE below that remain open and will be addressed before the final BCA draft.

• How will each end-user organizations decide how it shall phase-out all products currently in inventory that will be replaced by the XYZ system? (This will have a material impact upon transaction types that can be applied to specific products).

• What confirmation has been published by the PM Office on the 20% of “extra” systems to be manufactured and stored? (This will have a major impact on the expenditures of the PSE).

• Will a formal process be employed to align ACEIT with the BCA?

• Fielding schedule of Org3 is still in discussion. BCA study has employed the fielding of 6 end-items per year from 2015 through 2017; this is in conflict with that of the desire of Org3 to field all 18 end-items in 2016. Though there is no impact on the XYZ system TOC for this fielding schedule, Org3 may incur additional expenses for retaining their legacy like-kind weapon system over a three year period.


77

Appendix a


78


79


80


81

# Of End-Items To Be Fielded By Location Deployment

Status Deployable End-Items

End-user Org1 Org2 Org3 Org4 Org5 Totals

Segment Active Non- active Active Active Non-

active Active Non- active Active Non-

active

CONUS Alabama 0 10 1 0 0 0 0 0 0 11 Arizona 0 0 1 0 0 2 0 0 0 3

Arkansas 0 2 1 0 0 1 0 0 0 4 California 0 4 2 6 0 2 0 0 0 14 Colorado 7 0 1 0 0 1 0 0 0 9

Connecticut 0 0 1 0 0 0 0 0 0 1 Delaware 0 0 1 0 0 1 0 0 0 2

DC 0 0 1 0 0 0 0 0 0 1 Florida 0 2 2 0 0 3 0 0 0 7 Georgia 9 4 1 0 0 0 0 0 0 14 Idaho 0 0 1 0 0 0 0 0 0 1 Illinois 0 5 1 0 0 1 0 0 0 7 Indiana 0 2 1 0 0 0 0 0 0 3 Iowa 0 1 1 0 0 0 0 0 0 2

Kansas 2 0 1 0 0 0 0 0 0 3 Kentucky 13 1 1 0 0 0 0 0 0 15 Louisiana 5 0 1 0 0 1 0 0 0 7

Maine 0 0 1 0 0 0 0 0 0 1 Maryland 24 2 1 0 0 1 0 0 0 28

Massachusetts 0 2 1 0 0 0 0 0 0 3 Michigan 0 0 1 0 0 0 0 0 0 1 Minnesota 0 2 1 0 0 0 0 0 0 3 Mississippi 0 0 1 0 0 0 0 0 0 1 Missouri 0 1 1 0 0 0 0 0 0 2 Montana 0 7 1 0 0 0 0 0 0 8 Nebraska 0 1 1 0 0 0 0 0 0 2 Nevada 0 1 1 0 0 1 0 0 0 3

New Hampshire

0 0 1 0 0 0 0 0 0 1

New Jersey 0 4 1 0 0 1 0 0 0 6 New Mexico 0 0 1 0 0 0 0 0 0 1 New York 4 3 2 0 0 0 0 0 0 9

North Carolina 20 0 1 6 0 0 0 0 0 27

North Dakota 0 0 1 0 0 0 0 0 0 1 Ohio 0 3 1 0 0 0 0 0 0 4

Oklahoma 0 1 1 0 0 1 0 0 0 3 Oregon 0 1 1 0 0 0 0 0 0 2

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82






active

Pennsylvania 0 2 1 0 0 0 0 0 0 3 Rhode Island 0 0 1 0 0 0 0 0 0 1

South Carolina 0 4 1 0 0 2 0 0 0 7 South Dakota 0 1 1 0 0 0 0 0 0 2 Tennessee 0 1 1 0 0 0 0 0 0 2

Texas 9 7 1 0 0 0 0 0 0 17 Utah 0 0 1 0 0 1 0 0 0 2

Vermont 0 1 1 0 0 0 0 0 0 2 Virginia 0 3 1 0 0 1 0 7 0 12

Washington 18 3 1 0 0 0 0 0 0 22 West Virginia 0 1 1 0 0 0 0 0 0 2

Wisconsin 0 3 1 0 0 0 0 0 0 4 Wyoming 0 0 1 0 0 0 0 0 0 1

Virgin Islands 0 0 1 0 0 0 0 0 0 1 Puerto Rico 0 0 1 0 0 0 0 0 0 1

CONUS Total 111 85 54 12 0 20 0 7 0 289 OCONUS:

Pacific

Alaska 2 0 1 0 0 1 0 0 0 4 American Samoa

0 0 0 0 0 0 0 0 0 0

Guam 0 0 1 0 0 1 0 0 0 2 Hawaii 2 1 1 0 0 0 0 0 0 4 Japan 0 0 0 4 0 3 0 0 0 7

S. Korea 5 0 0 0 0 0 0 0 0 5 N. Marianas

Is.

0 0 0 0 0 0 0 0 0 0

Marshall Is. 0 0 0 0 0 0 0 0 0 0 Wake Is. 0 0 0 0 0 0 0 0 0 0

Other 0 0 0 0 0 0 0 0 0 0 OCONUS:

Pacific Total 9 1 3 4 0 5 0 0 0 22

OCONUS: Europe/W.

Asia

Germany 2 0 0 0 0 2 0 0 0 4 Italy 0 0 0 0 0 1 0 0 0 1

Turkey 0 0 0 0 0 0 0 0 0 0 U.K. 0 0 0 0 0 2 0 0 0 2

Portugal 0 0 0 0 0 0 0 0 0 0 W.Asia 0 0 0 0 0 0 0 0 0 0

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83






active

OCONUS: Europe/ W. Asia Total

2 0 0 0 0 5 0 0 0 7

All OCONUS Total 11 1 3 4 0 10 0 0 0 29

All Locations Totals 122 86 57 16 0 30 0 7 0 318


Status Non-Deployable End-Items

End-user Org1 Org2 Org3 Org4 Org5

Totals Segment Active Non- active Active Active Non-

active Active Non- active Active Active

End-Item Positioning

School house

School house

School house

School house

School house

School house

School house

School house

School house






Maine 0 0 0 0 0 0 0 0 0 0 Maryland 0 0 0 0 0 1 0 0 0 1

Massachusetts 0 0 0 0 0 1 1 0 0 2


84







School house

School house

School house

School house

School house

School house

School house

School house

School house

Michigan 0 0 0 0 0 0 1 0 0 1 Minnesota 0 0 0 0 0 0 1 0 0 1 Mississippi 0 0 0 0 0 2 0 0 0 2 Missouri 8 0 0 0 2 1 0 0 0 11 Montana 0 0 0 0 0 1 1 0 0 2 Nebraska 0 0 0 0 0 1 0 0 0 1 Nevada 0 0 0 0 0 2 0 0 0 2

New Hampshire 0 0 0 0 0 0 0 0 0 0


North Carolina 0 0 0 0 0 1 2 0 0 3


Oklahoma 0 0 0 0 0 3 0 0 0 3 Oregon 0 0 0 0 0 0 1 0 0 1


South Carolina 0 0 0 0 0 2 0 0 0 2

South Dakota 0 0 0 0 0 1 0 0 0 1 Tennessee 0 0 0 0 0 1 0 0 0 1

Texas 0 0 0 0 0 7 1 0 0 8 Utah 0 0 0 0 0 1 0 0 0 1

Vermont 0 0 0 0 0 0 0 0 0 0 Virginia 0 0 0 0 0 1 0 4 0 5




CONUS Total 8 0 0 0 2 62 23 4 0 99

OCONUS: Pacific

Alaska 0 0 0 0 0 2 0 0 0 2


85







School house

School house

School house

School house

School house

School house

School house

School house

School house

American Samoa 0 0 0 0 0 0 0 0 0 0


S.Korea 0 0 0 0 0 2 0 0 0 2 N. Marianas

Is. 0 0 0 0 0 0 0 0 0 0


Other 0 0 0 0 0 0 0 0 0 0 OCONUS:

Pacific Total 0 0 0 0 0 10 0 0 0 10

OCONUS: Europe/W.

Asia

Germany 0 0 0 0 0 3 0 0 0 3 Italy 0 0 0 0 0 1 0 0 0 1

Turkey 0 0 0 0 0 1 0 0 0 1 U.K. 0 0 0 0 0 3 0 0 0 3

Portugal 0 0 0 0 0 1 0 0 0 1 W.Asia 0 0 0 0 0 9 0 0 0 9


0 0 0 0 0 18 0 0 0 18

All OCONUS Total 0 0 0 0 0 28 0 0 0 28

All Locations

Totals 8 0 0 0 2 90 23 4 0 127


Status All End-Items

Segment Org1 Org2 Org3 Org4 Org5 Total




86






Maine 0 0 1 0 0 0 0 0 0 1 Maryland 24 2 1 0 0 2 0 0 0 29

Massachusetts 0 2 1 0 0 1 1 0 0 5 Michigan 0 0 1 0 0 0 1 0 0 2 Minnesota 0 2 1 0 0 0 1 0 0 4 Mississippi 0 0 1 0 0 2 0 0 0 3 Missouri 8 1 1 0 2 1 0 0 0 13 Montana 0 7 1 0 0 1 1 0 0 10 Nebraska 0 1 1 0 0 1 0 0 0 3 Nevada 0 1 1 0 0 3 0 0 0 5

New Hampshire 0 0 1 0 0 0 0 0 0 1


North Carolina 20 0 1 6 0 1 2 0 0 30


Oklahoma 0 1 1 0 0 4 0 0 0 6 Oregon 0 1 1 0 0 0 1 0 0 3


South Carolina 0 4 1 0 0 4 0 0 0 9

South Dakota 0 1 1 0 0 1 0 0 0 3 Tennessee 0 1 1 0 0 1 0 0 0 3

Texas 9 7 1 0 0 7 1 0 0 25 Utah 0 0 1 0 0 2 0 0 0 3

Vermont 0 1 1 0 0 0 0 0 0 2


87






Virginia 0 3 1 0 0 2 0 11 0 17




CONUS Total 119 85 54 12 2 82 23 11 0 388

OCONUS: Pacific 0 0 0 0 0 0 0 0 0 0

Alaska 2 0 1 0 0 3 0 0 0 6 American Samoa 0 0 0 0 0 0 0 0 0 0


S.Korea 5 0 0 0 0 2 0 0 0 7 N. Marianas

Is. 0 0 0 0 0 0 0 0 0 0


Other 0 0 0 0 0 0 0 0 0 0 OCONUS:

Pacific Total 9 1 3 4 0 15 0 0 0 32

OCONUS: Europe/W.

Asia 0 0 0 0 0 0 0 0 0 0

Germany 2 0 0 0 0 5 0 0 0 7 Italy 0 0 0 0 0 2 0 0 0 2

Turkey 0 0 0 0 0 1 0 0 0 1 U.K. 0 0 0 0 0 5 0 0 0 5

Portugal 0 0 0 0 0 1 0 0 0 1 W.Asia 0 0 0 0 0 9 0 0 0 9


2 0 0 0 0 23 0 0 0 25

All OCONUS Total 11 1 3 4 0 38 0 0 0 57

All Locations 130 86 57 16 2 120 23 11 0 445


88






Totals


89

Appendix b

1

of

28

Product Applicability

Product Requiring A Solution

Applicable Product Requiring Solution

Solution Business Model Element In

Which Alternatives Were Reviewed

Conclusions: Preferred Alternative Selected for Solution

Business Model

y Sensors/Meters Product Support Process:

Field Maintenance: Correct item

failure

Who can perform item repair work? Contractor

n Electronic Item

reparability type:

Reparable What transaction can be employed for item?

Loan, Repair, Return [LRR] or Repair Return

[RR] n Electrical

n Mechanical Where item

repaired:

Government or Contractor Sustainment/

depot

Who can manage physical distribution to/from end-user?

Government

N/A Structure

N/A Hardware/Soft goods

Item design source type:

COTS Who can own Cycle Stock & Safety Stock?

Majority Contractor

N/A Ensembles Item tech life

duration type:

Very low

Who can provide direct labor in field?

Government; marginal

N/A Application Software Will there be a Joint PSP? Yes


90

Appendix b

2 of 28


Product Requiring A Solution

Applicable Product Requiring Solution




Business Model

y Sensors/Meters

Product Support Process:


failure

Who can perform item repair work?

Contractor

y Electronic Item

reparability type:

Reparable What transaction can be employed for item?

Supplier Forward Like-Kind Exchange;

Government will have own exchange pool y Electrical

y Mechanical

Where item

repaired:


depot

Who can manage

physical distribution to/from end-user?

Government

N/A Structure



COTS

Who can own Cycle Stock & Safety Stock? Majority Government

N/A Ensembles Item tech

life duration

type:

Hi/Med/Lo Who can provide direct

labor in field? Government; marginal

N/A Application Software Will there be a Joint PSP? No


91

Appendix b

3 of 28


Product Requiring A Solution Applicable Product

Requiring Solution




Business Model



failure

Who can perform item repair work? Government

n Electronic Item reparability

type: Reparable

What transaction can be employed for item?


Government will have own exchange pool n Electrical


repaired:


depot


Government N/A Structure



GOTS

Who can own Cycle Stock & Safety Stock? 100% Government


life duration

type:

Lo Who can provide direct




92

Appendix b

4 of 28



Requiring Solution




Business Model

n Sensors/Meters Product Support Process:


failure



type: Reparable




y Mechanical Where item

repaired: Field





DI



life duration

type:

Mid/Hi Who can provide direct




93

Appendix b

5 of 28



Requiring Solution




Business Model



failure


Government or Contractor


type: Reparable

What transaction can be employed for item? Fix on-site

n Electrical


repaired: Field


N/A N/A Structure



COTS

Who can own Cycle Stock & Safety Stock? N/A


life duration

type:



y Application Software Will there be a Joint PSP? Yes


94

Appendix b

6 of 28



Requiring Solution




Business Model



failure

Who can perform item repair work? N/A

y Electronic Item reparability

type: Non-reparable What transaction can be

employed for item? Sale y Electrical


repaired: Field Who can manage


Government

N/A Structure

y Hardware/Soft goods


COTS



life duration

type:

N/A Who can provide direct




95

Appendix b

7 of 28



Requiring Solution




Business Model


Field Maintenance: Correct minor

damage



type: Reparable


Loan, Repair, Return [LRR] or Repair Return

[RR] n Electrical


repaired:


depot


Government

n Structure



COTS

Who can own Cycle Stock & Safety Stock? Majority Contractor


life duration

type:

Very low Who can provide direct




96

Appendix b

8 of 28



Requiring Solution




Business Model



damage



type: Reparable



Government will have own exchange pool y Electrical


repaired:


depot





COTS



life duration

type:

Hi/Med/Lo Who can provide direct




97

Appendix b

9 of 28



Requiring Solution




Business Model



damage



type: Reparable





repaired:


depot





GOTS



life duration

type:





98

Appendix b

10 of 28



Requiring Solution




Business Model



damage



type: Reparable





repaired: Field


Government y Structure



DI



life duration

type:

Mid/Hi Who can provide direct

labor in field? Government



99

Appendix b

11 of 28



Requiring Solution




Business Model



damage




type: Reparable

What transaction can be employed for item? Fix on-site

n Electrical


repaired: Field


N/A N/A Structure



COTS



life duration

type:





100

Appendix b

12 of 28



Requiring Solution




Business Model

N/A Sensors/Meters Product Support Process:


damage



type: Non-reparable

What transaction can be employed for item? Sale

y Electrical


repaired: Field





COTS



life duration

type:





101

Appendix b

13 of 28



Requiring Solution




Business Model


Field Maintenance:

Replace shrinkage


N/A


type:

Reparable/ Non-reparable


n Electrical


repaired: N/A Who can manage



n Hardware/Soft goods


COTS

Who can own Cycle Stock & Safety Stock? Majority contractor

y Ensembles Item tech

life duration

type:

Hi Who can provide direct




102

Appendix b

14 of 28



Requiring Solution




Business Model


Field Maintenance:

Replace shrinkage



type:

Reparable/ Non-reparable


y Electrical







COTS/GOTS/DI


n Ensembles Item tech life

duration type:

All

Who can provide direct labor in field? Government; marginal

N/A Application Software Will there be a Joint

PSP? No


103

Appendix b

15 of 28



Requiring Solution




Business Model


Field Maintenance: Test/Calibrate

Who can perform item test/calibrate work? Contractor


type: N/A


Loan, Repair, Return [LRR] or Repair Return [RR]; Contractor loaner

item ownership n Electrical


repaired:


depot

Who can manage





COTS



duration type:

Very low




PSP? Yes


104

Appendix b

16 of 28



Requiring Solution




Business Model


Field Maintenance: Test/Calibrate

Who can perform item test/calibrate work? N/A


type: N/A

What transaction can be employed for item? Test/calibrate on-site

y Electrical


calibrated: Field


Government

N/A Structure



COTS/GOTS/DI

Who can own test equipment? 100% Government


duration type:

Lo/Med/Hi




PSP? No


105

Appendix b

17 of 28



Requiring Solution




Business Model


Field Maintenance:

Use based replacement

Who can perform item work? N/A


type: Non-reparable


Sale

n Electrical




Government n Structure



COTS



life duration

type:





106

Appendix b

18 of 28



Requiring Solution




Business Model


Field Maintenance:

Use based replacement

Who can perform item work? N/A


type: Non-reparable


y Electrical


calibrated: N/A





COTS

Who can own Cycle Stock & Safety Stock?

Majority Government

n Ensembles Item tech

life duration

type:





107

Appendix b

19 of 28



Requiring Solution




Business Model


Sustainment Maintenance:

Modify Who can perform item

modification? Contractor


type: Reparable


Loan, Repair, Return or Repair, Return

n Electrical


modified:


Depot





COTS


Majority Contractor


life duration

type:

Very lo Who can provide direct


n Application Software Will there be a Joint PSP? Yes


108

Appendix b

20 of 28



Requiring Solution




Business Model






type: Reparable

What transaction can be employed for item? Modify on-site

n Electrical


modified: Field Who can manage


N/A n Structure



COTS


N/A


life duration

type:


labor in field? N/A



109

Appendix b

21 of 28



Requiring Solution




Business Model






type: Reparable



n Electrical


modified:

Government or Contractor Sustainment

Depot





COTS



life duration

type:



n Application Software Will there be a Joint PSP? No


110

Appendix b

22 of 28



Requiring Solution




Business Model




modification? Government


type: Reparable

What transaction can be employed for item? LKE

n Electrical


modified:


Depot

Who can manage


Government

n Structure



GOTS

Who can own Cycle Stock & Safety Stock? Government


life duration

type:



n Application Software Will there be a Joint PSP? No


111

Appendix b

23 of 28



Requiring Solution




Business Model



Repair Catastrophic Damage &

Reset

Who can perform item repair? Contractor


type: Reparable



n Electrical


modified:


Depot


Government

n Structure



COTS



life duration

type:

Very Lo Who can provide direct




112

Appendix b

24 of 28



Requiring Solution




Business Model




Reset

Who can perform item repair? Contractor


type: Reparable

What transaction can be employed for item? Sale or fix

n Electrical n Mechanical Where

item replaced/ replaced:


Depot


N/A n Structure



COTS



life duration

type:





113

Appendix b

25 of 28



Requiring Solution




Business Model




Reset

Who can perform item replacement? Contractor


type: Non-reparable


n Electrical


replaced/ replaced:


Depot


Government

n Structure



COTS



life duration

type:

Hi Who can provide direct




114

Appendix b

26 of 28



Requiring Solution




Business Model




Reset

Who can perform item repair? Majority Government


type: Reparable

What transaction can be employed for item? LKE

y Electrical


replaced/ replaced:


Depot


Government y Structure



COTS/GOTS/DI



duration type:

Hi/Med/Lo

Who can provide direct labor in field? Government

n Application Software Will there be a Joint

PSP? No


115

Appendix b

27 of 28



Requiring Solution




Business Model




Reset

Who can perform item repair? Majority Government


type: Non-reparable


y Electrical y Mechanical Where



Depot





COTS/GOTS/DI



duration type:

Med/Lo

Who can provide direct labor in field? Government

n Application Software Will there be a Joint

PSP? No


116

Appendix b

28 of 28



Requiring Solution




Business Model



Store Who can perform item

inspect? Majority Government


type: All


N/A y Electrical y Mechanical Where


Storage Facility


N/A y Structure



All



life duration

type:

All Who can provide direct


y Application Software Will there be a Joint PSP? No


117

Appendix c

Organization XYZ System Annual Product Support Targeted Expenditures (2012 $millions)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 TOC

Org1 total $0.5 $1.6 $3.0 $4.7 $6.7 $8.0 $8.3 $35.4 $7.9 $7.7 $13.7 $6.4 $25.5 $4.1 $2.3 $0.8 $136.7

# end-items 11 39 73 117 168 206 216 216 216 216 206 185 159 117 60 14 per end-

item $0.04 $0.04 $0.04 $0.04 $0.04 $0.04 $0.04 $0.16 $0.04 $0.04 $0.07 $0.03 $0.16 $0.03 $0.04 $0.06 $0.06

Org2 total $0.4 $1.9 $3.7 $5.2 $6.6 $7.6 $7.6 $14.7 $7.2 $7.0 $8.2 $5.2 $7.6 $2.3 $1.0 $0.2 $86.4

# end-items 3 13 26 37 48 56 57 57 57 57 54 44 31 20 9 1 per end-

item $0.14 $0.15 $0.14 $0.14 $0.14 $0.14 $0.13 $0.26 $0.13 $0.12 $0.15 $0.12 $0.24 $0.11 $0.11 $0.13 $0.15

Org3 total $0.0 $0.4 $1.1 $1.8 $2.2 $2.1 $2.1 $4.9 $2.0 $1.9 $2.6 $1.6 $2.4 $0.3 $0.0 $0.0 $25.4

# end-items 0 3 9 15 18 18 18 18 18 18 18 15 9 3 0 0 per end-

item $0.00 $0.00 $0.12 $0.12 $0.12 $0.12 $0.12 $0.27 $0.11 $0.11 $0.14 $0.00 $0.00 $0.00 $0.00 $0.00 $0.14

Org4 total $0.0 $0.0 $0.0 $0.3 $1.0 $1.5 $1.8 $10.6 $1.7 $1.6 $4.0 $1.6 $10.3 $1.3 $0.8 $0.4 $36.8

# end-items 0 0 0 25 75 122 143 143 143 143 143 143 143 118 68 21 per end-

item $0.00 $0.00 $0.00 $0.01 $0.01 $0.01 $0.01 $0.07 $0.01 $0.01 $0.03 $0.01 $0.07 $0.01 $0.01 $0.02 $0.03

Org5 total $0.1 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $1.6 $0.2 $0.2 $0.3 $0.0 $0.0 $0.0 $0.0 $0.0 $3.7

# end-items 6 11 11 11 11 11 11 11 11 11 6 0 0 0 0 0 per end-

item $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.14 $0.02 $0.02 $0.05 $0.00 $0.00 $0.00 $0.00 $0.00 $0.03

Total $1.0 $4.1 $8.0 $12.3 $16.7 $19.5 $20.0 $67.2 $19.0 $18.5 $28.8 $14.7 $45.9 $7.9 $4.1 $1.4 $289.1

# end-items 20 65 119 205 321 412 445 445 445 445 426 387 342 258 136 37 per end-

item $0.06 $0.08 $0.09 $0.07 $0.06 $0.05 $0.05 $0.17 $0.05 $0.05 $0.08 $0.04 $0.15 $0.03 $0.03 $0.04 $0.06

Service % of Life Cycle Cost

Org1 47.3% Org2 12.7% Org3 8.8% Org4 1.3% Org5 29.9% Total 100.0%


118

Appendix d Acronyms

Acronym Description 3PL Third Party Logistics

ACAT Acquisition Category ACEIT Advanced Cost Estimating Integrated Tool

Am Materiel Availability BCA Business Case Analysis BER Beyond Economic Repair BLS Bureau of Labor Statistics BOK Body Of Knowledge BOM Bill Of Material CDD Capability Development Document CER Cost Estimating Relationship

CF/LKE Customer Forward Like Kind Exchange COCO Contractor-Owned, Contractor-Operated COTS Commercial Off The Shelf CPI Continuous Process Improvement CRV Current Replacement Value DI Developmental Item

DLA Defense Logistics Agency DMS/MS Diminishing Manufacturing Sources/Materiel Shortages

ECP Engineering Change Proposals ELI Enterprise Logistics Initiative EOL End-Of-Life

GOGO Government-Owned, Government-Operated GOTS Government Off The Shelf IAW In Accordance With ICP Inventory Control Point ILS Integrated Logistics Support IT Information Technology

JIPT Joint Integrated Project Team JPEO Joint Program Executive Office JPM Joint Program Manager JPSE Joint Product Support Enterprise JPSS Joint Product Support Services KPP Key Performance Parameter

LCMC Life Cycle Management Command LLC Limited Liability Corporation

LORA Level Of Repair Analysis


119

Acronym Description LRR Loan, Renew & Return LRU Line Replacement Unit MAC Maintenance Allocation Chart MS B Milestone B MS C Milestone C MTBF Mean Time Between Failure O&M Operations & Maintenance OEM Original Equipment Manufacturer OUSD (AT&L)

Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics

POM Program Objective Memorandum PPP Public Private Partnership PSE Product Support Enterprise PSI Product Support Integrator PSM Product Support Manager PSS Product Support Strategy R&D Research & Development

ROMO Range Of Military Operations SCM Supply Chain Management SEC Security and Exchange Commission [SEC] SETA System Engineering & Technical Assistance

SF/LKE Supplier Forward Like Kind Exchange SME Subject Matter Expert SORA Source Of Repair Analysis T&E Test & Evaluation TDP Technical Data Package TOC Total Ownership Cost


120

Appendix e

Glossary of Terms

Terminology # Term Description

1 Product

Support BCA study

Applies a highly disciplined methodology that recommends the preferred constructs of the business models employed by the

members of the Joint Product Support Enterprise [JPSE]. The study recommendation balances system Materiel Availability [Am],

affordability and “jointness”.

2

Product Support

Enterprise [PSE]

A virtual organization employed in managing field and sustainment maintenance management activities throughout the in-service life of

the XYZ weapon system.

3 End-item An item that comprises the entire system configuration

4 In-service life The period from an end-item being fielded to the time that it is retired from end-item inventory

5 Target cost The cost for a delivered solution that an end-user should pay; based upon best business practices

6 Activity Based Costing

A cost estimating technique which is driven by the resources employed in Product Support activities/processes

7 Product Support Manager

Appointed by the Program Manager to oversee the materiel Availability and affordability of the weapon system throughout its

life

8 Product Support

Integrator

Appointed by Product Support Manager to perform majority of activities tasked by PM to PSM

9 Product Support Provider

Organizations that are tasked by the Product Support Integrator to deliver solutions to the end-users. They can be Governmental

organizations, contractors or Public Private Partnerships

10 Continuous

Process Improvement

A proactive initiative to reduce the frequency and duration of any process/activity and to reduce the unit cost of any resource that is

employed in the process

11

Diminishing Manufacturing

Sources/ Material

Shortages

When supply chains get "cold" due to technology changes, business closures, unplanned events or a host of many other issues. Much

DMS/MS exposure exists for COTS items. Can materially impact Am and affordability

12 Supply Chain management transactions

A series of forward and reverse activities between customer and suppliers

13 Like-Kind Exchange

A supply chain management transaction in which a supplier provides a customer with an item, and the customer must return a

similar item in either an impaired condition (i.e. failed) or non-impaired condition (i.e. recall)

14 Materiel Availability

A Key Performance Parameter which measures the percentage of deployable fielded end-items that can be deployed within a certain period of time. For example, a requirement of an Am of 80% for


121

Terminology # Term Description

100 deployable end-items would mean that for a specific period in time, 80 end-items must be able to be deployed


122

Appendix f

Bibliography

Bibliography # Title 1 DoD Product Support BCA Guidebook; Version April 2011 2 DoD Product Support Manager Guidebook; Version April 2011 3 MITRE; Integrated Project Team [IPT] Start-Up Guide 2008

4

Buying Commercial: Gaining the Cost/ Schedule Benefits for Defense Systems, Report of the Defense Science Board Task Force on Integrating Commercial Systems into the DOD, Effectively and Efficiently. February 2009, Office of the Undersecretary of Defense for Acquisition, Technology and Logistics [OUSD (AT&L)]

5 AMC Memorandum, AMCSC, September 29, 2006, Subject: Performance-Based Logistics (performance based) Implementation within the U.S. Army Materiel Command.

6 Army Memorandum, SAAL-ZL, 18 August 2005, SUBJECT: Performance-Based Logistics Business Case Analysis Policy.

7 Army Memorandum, SAAL-ZL, SUBJECT: Performance-Based Logistics (PERFORMANCE BASED) Metrics Policy.

8 AR 70–1 Army Acquisition Policy 9 AR 700–90 Army Industrial Base Process 10 6. AR 700–127 Integrated Logistics Support 11 7. AR 700–138 Army Logistics Readiness and Sustainability 12 8. AR 700–139 Army Warranty Program 13 9. AR 700–142 Type Classification Materiel Release, Fielding, and Transfer 14 10. AR 702–7–1 Reporting of Product Quality Deficiencies within the US Army 15 11. AR 710–1 Centralized Inventory Management of the Army Supply System 16 12. AR 710–2 Supply Policy Below the National Level 17 13. AR 711–7 Supply Chain Management 18 14. AR 715–9 Contractors Accompanying the Force 19 15. AR 750–1 Army Materiel Maintenance Policy 20 16. CJCSI 3170.01F, Joint Capabilities Integration and Development System

21 17. CJCS Manual 3170.01C, Operation of the Joint Capabilities Integration and Development System

22 18. DA Pam 700–28 ILS Program Assessment Issues and Criteria

23 19. DA Pam 700–56 Logistics Supportability Planning and Procedures in Acquisition

24 20. DA Pam 700–142 Instructions for Materiel Release, Fielding, and Transfer 25 21. DFAS–IN Reg 37–1 Finance and Accounting Policy Implementation 26 22. DoD Continuous Process Improvement Transformation Guidebook 27 23. DOD 4140.1-R, DoD Supply Chain Materiel Management Regulation 28 24. DODD 5000.1 The Defense Acquisition System 29 25. DODI 5000.2 Operation of the Defense Acquisition System 30 26. MIL–HDBK–502 Acquisition Logistics. 31 27. MIL–HDBK–881A Work Breakdown Structures for Defense Materiel Items


123

Bibliography # Title 32 28. MIL–PRF–49506 Logistic Management Information 33 29. 10 USC Sec 2208 Working capital funds 34 30. 10 USC 2464 Core logistics capabilities

35 31. 10 USC Sec 2466 Limitations on the performance of depot-level maintenance of materiel

36 32. 10 USC Sec 2474 Centers of industrial and technical excellence: Designation; Public-Private Partnerships

37 33. 10 USC Sec. 2501 National security objectives concerning national technology and industrial base.

38 CAPE O&S Cost Estimating Guide 39 Logistics Assessment Guidebook 40 Public Private Partnering for Sustainment Guidebook 41 Integrated Product Support (IPS) Element Guidebook 42 Defense Acquisition Guidebook (DAG) 43 DoD Financial Management Regulation (FMR)

44 DoD Acquisitions Buying Commercial Items and Non-developmental Items: Defense Standardization Program Office 2010

45 US Army Product Support Manager Concept Of Operations; The Office of the Assistant Secretary of the Army (Acquisition, Logistics and Technology) Provisional May12

46 SD-22, Diminishing Manufacturing Sources and Material Shortages: A Guidebook of Best Practices for Implementing a Robust DMSMS Management Program; Defense Standardization Program Office

47 GAO Report: Further Action Needed to Improve DOD's Insight and Management of Long-term Maintenance Contracts


124

Appendix g

BCA JIPT Charter

Core Elements of a JIPT Charter

The purpose for forming a JIPT is to allow representatives of all key stakeholder groups

to effectively address difficult project issues. If the JIPT does not have the clear

established authority to address those issues, the very purpose for creating a JIPT is

defeated. In order to establish this clear authority the elements below need to be

addressed in this Charter.

Purpose of This JIPT Charter

To assure that all inputs to a Performance Based Product Support Business Case

Analysis [BCA] Study for the Milestone “C” review of XYZ ACAT III weapon system are

approved by each of the end-user organizations. This study defines the efficiency and

effectiveness of the processes to be employed by the Joint Product Support Enterprise

[JPSE] throughout the IOC and FOC life cycle periods of the weapon system.

JIPT Outcomes/Outputs

The specific outcomes/outputs of the IPT are the following:

• Agreement on Performance Based Product Support Agreements [PSAs] for each

end-user organization.

• Agreement on Performance Based Product Support Strategies [PSSs] for each

end-user organization.

• Agreement on Core Depot Assessment [CDA] and Depot Source of Repair

[DSOR] for each end-user organization.

• Agreement on all OPTEMPOs scenarios employed during life cycle of system for

each end-user organization.

• Agreement on BCA conclusions and recommendations.

• Others.


125

JIPT Authority

• The scope and authority of this JIPT limits unilateral decisions upon any one end-

user organization.

• Certain decisions should or might be elevated to specific governance or specialist

bodies; though there will be an effort to minimize the need to elevate an issue.

Key External Processes

Processes that extend beyond the internal functioning of the JIPT will be determined by

the JIPT membership and presented to the Leadership of JIPT members.

Oversight

How often and to whom the JIPT will report progress and a description of what will be

reported will be established.

Membership

No more than 2 permanent representatives from the following areas will be employed

by the JIPT:

• Product Management Office.

• Joint Program Executive Office.

• Org2 Project Office.



• Org5 Combat Developer.

• Org1 Depot/Logistics Command.


• Org3 Material Developer.


126




• OEM.

• Others.

Qualifications/Skills of JIPT Members

• Those specific to the nature of the work the JIPT is undertaking (i.e. Logistics,

configuration management, cost management, etc.).

• Generic skills needed to be a JIPT leader or team member (i.e. creativity, discipline,

etc.).

• Subject Matter Experts [SMEs] will be invited to a JIPT meeting when required; they

will be invited by IPT Leader.

JIPT Decision Making

The level of authority of individual JIPT members is to allow them to decide for

themselves the manner in which they will arrive at decisions and recommendations.

This is especially important for this Joint Program.

JIPT Leadership/Facilitator

• Selection

o Leader: XXX, PM Office.

o Facilitator: XXX, Team OEM.

• Commitment from JIPT Leader/Facilitator Supervisor;

o The most important stakeholder for every individual JIPT member,

including the JIPT Leader/Facilitator, is the supervisor to whom they


127

permanently report; this being the Government/Contractor Product

Manager.

o It is essential that the JIPT Leader/Facilitator direct supervisor be

completely committed to work of the JIPT and their employee’s role on

the JIPT.

• Lack of Bias;

Since the JIPT must reach decisions that represent the point of view of as many

stakeholders as possible the Leader/Facilitator must be perceived as relatively

unbiased by the needs or point of view of his/her own constituent organization

or function.

• Technical/Domain Expertise;

The work of a JIPT usually requires some concentration of technical skills and/or

knowledge of the user or operational domain to which the JIPT product will be

applied. Although the Leader/Facilitator need not be an expert in those areas, it

may be important that the Leader/Facilitator be conversant in the technical area

or operational domain or at least willing and able to learn about it.

• Project Management;

The Leader/Facilitator effectively oversees project management; creates and

manages to the Project Plan and schedule, tracks/adjusts project resources and

tasks, and addresses project risk.

• Management of External Environment;

o The Leader/Facilitator works effectively and impartially with the various

organizations represented on the JIPT and effectively manages the impact

of the external environment; spans organizational boundaries, monitors


128

and informs members of events that impact the team, removes

roadblocks, and supports members within their organizations.

o The Leader/Facilitator also needs strong knowledge and relationships with

the larger political/organizational/cultural environment the JIPT team is

working within.

o The Leader/Facilitator plays the central role in engaging on a regular basis

the external sponsors and executives of the project and ensuring the

JIPT’s work is adequately reviewed and good feedback is provided.

• Team Engagement;

o The Leader/Facilitator actively includes team members in the decision

making process, demonstrating fairness, respect, and consideration.

o The Leader/Facilitator coordinates the team’s collective actions and

integrates members’ ideas into the team’s recommendations.

• Time Management;

The Leader/Facilitator effectively manages time during meetings, with the

support of a Facilitator.

• Personal Commitment;

o The Leader/Facilitator must have a personal stake in the JIPT’s success

and believe the JIPT’s goals will truly benefit the larger organization.

o The Leader/Facilitator personal career goals must be aligned with the

success of the JIPT.

This charter is considered a “living document.” JIPT members may request changes to

the charter by sending written recommendations for change to the BCA JIPT


129

Lead/Facilitator. Changes will be evaluated/assessed by the membership and if

approved, changes will be incorporated in future revisions.

Once signed, this charter will remain in effect for the duration of the BCA JIPT.


130

Appendix h

A Sample of a PSI Selection Questionnaire

Que

stio

n #

Product Support Process Applicability

Res

pons

e M

ater

ialit

y W

eigh

t Bas

ed

Upo

n 10

0 To

tal W

eigh

t

Question

Can

dida

te's

Writ

ten/

Ver

bal R

espo

nse

Eva

luat

ors

Gra

ding

as

a %

of B

asel

ine

wei

ght

All

Line

Cor

rect

/Pre

vent

Fai

lure

Rep

lace

use

item

s

Dep

ot O

verh

aul/U

pgra

de

Dep

ot D

amag

e R

epai

r

Sto

rage

Wt 0.2500 0.0800 0.3500 0.2600 0.0400 0.0200 1.0000 Process Total Weights

1 7.00% 0.0175 Who will be selected to be the

Leader of the PSI Office? (provide resume/bio)

2 6.00% 0.0150

What application software (s) will you utilize to collect data sets from PSPs/organic organizations to

measure the efficiency and effectiveness of performance

agreements?

4 5.50% 0.0138

How will you work with the current LCMC infrastructure to provide support to the PSI Office? (Item

Managers, Engineering, Software, Warranty and others)

5 5.50% 0.0138 Who will be selected to be the next 2

highest ranking individuals in PSI Office? (provide resumes/bios)

6 5.00% 0.0125 How will you forecast sustainment $$

requirements for 2 and 5 years ahead for all colors of money?

8 4.50% 0.0113

How will you measure the productivity of your organization and how will you continually improve its

productivity?

9 4.50% 0.0113 How will you provide incentives to

contractors to meet their performance agreements?

10 4.50% 0.0113

What other professional resources will you use to complement your PSI

initiative: consultants, training, conferences and others? (provide

details)

11 4.50% 0.0113 What will be the criteria of

terminating a PSP when they do not perform as required?


131

Que

stio

n #


Res

pons

e M

ater

ialit

y W

eigh

t Bas

ed

Upo

n 10

0 To

tal W

eigh

t

Question

Can

dida

te's

Writ

ten/

Ver

bal R

espo

nse

Eva

luat

ors

Gra

ding

as

a %

of B

asel

ine

wei

ght

All

Line

Cor

rect

/Pre

vent

Fai

lure

Rep

lace

use

item

s

Dep

ot O

verh

aul/U

pgra

de

Dep

ot D

amag

e R

epai

r

Sto

rage

12 4.00% 0.0100 How will you measure the

performance of the PSI Team members? (appraisal criteria)

13 4.00% 0.0100 What actions will you take if sustainment budgets are cut?

15 12.00% 0.0096

How will you update Mean Time Between Failure (MTBF) accuracy

and provide information to PSPs/organic organizations for

planning purposes?

16 10.00% 0.0260

What condition of parts will be employed during this sustainment event and explain why? (i.e. new-

only, not-new)

17 9.50% 0.0247

What elements of sustainment costs incurred over a period, regardless of

the "color of money," will be captured?

18 10.00% 0.0260 How will you initialize a quality

improvement program at suppliers that increases reliability?

19 10.00% 0.0260 How will you capture and monitor parts backorders and their age?

21 10.00% 0.0260

What will be the acceptable performance variance range on a

month-to-month basis with contractor PSPs? (i.e. parts fill rates of +/- from

PSA of 1.5%)

22 3.50% 0.0088

What actions will you take if the PSA is changed between the PM and PSI due to changes between the PM and

Warfighter?

23 3.50% 0.0088 What will be the organization

structure of the PSI Office? (i.e. personnel performing specific tasks)

24 12.00% 0.0312 How will assist depots to plan induction schedules?

25 3.00% 0.0075 How will you inform PM that you

are/will be encountering an unfavorable performance level?


132

Que

stio

n #


Res

pons

e M

ater

ialit

y W

eigh

t Bas

ed

Upo

n 10

0 To

tal W

eigh

t

Question

Can

dida

te's

Writ

ten/

Ver

bal R

espo

nse

Eva

luat

ors

Gra

ding

as

a %

of B

asel

ine

wei

ght

All

Line

Cor

rect

/Pre

vent

Fai

lure

Rep

lace

use

item

s

Dep

ot O

verh

aul/U

pgra

de

Dep

ot D

amag

e R

epai

r

Sto

rage

26 3.00% 0.0075 What planning tools will you be using to phase-out Non-PBL and phase-in

PSI PBL construct

27 3.00% 0.0075

What signing authority approach will you be taking to enable timely

response by Team members to war fighter/supplier requirements? (i.e.

spend $10K by Planner on a Sunday for premium freight costs, without

Leadership signing)

28 8.00% 0.0064



29 7.00% 0.0182 How will you improve dependent demand planning effectiveness of

your suppliers?

30 7.00% 0.0182

How will you manage the contracts/MOUs regarding

performance with your suppliers for newly upgraded systems?

31 7.00% 0.0182 How will you reduce the unit costs of parts; such as buying not-new parts?

32 7.00% 0.0182 What % of parts value at

wholesale/depot will be owned by contractors?

33 2.50% 0.0063 How will you employ a rotation cycle upon sustainment events planning?

34 2.50% 0.0063 How will you manage the

configuration record of all parts in stock?

35 2.50% 0.0063 How will you manage the

configuration record of software installed on systems?

36 2.50% 0.0063

How will you measure overall warfighter satisfaction levels of

sustainment support other than that of achieving PBA between PM and

PSI Office?

37 7.00% 0.0056 How will you decrease the cost of a CFSR?


133

Que

stio

n #


Res

pons

e M

ater

ialit

y W

eigh

t Bas

ed

Upo

n 10

0 To

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Question

Can

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Gra

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/Pre

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Fai

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Dep

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Sto

rage

38 7.00% 0.0056

How will you optimize wholesale parts investment in the supply chain

in order to meet parts availability performance commitments?

39 5.50% 0.0143 How will you minimize inbound-to-wholesale transportation costs for

parts?

40 2.25% 0.0056 What approach will you pursue to "write-off" of obsolete parts and

software?

41 2.00% 0.0050 How will you capture serial numbers of repairable LRUs?

42 5.00% 0.0130 How will you assure the proper

disposition of obsolete parts and software during an upgrade process?

43 30.00% 0.1050

How will you assure that the contractor/organic depots have

sufficient parts to meet schedules required to achieve performance

commitments?


45 1.75% 0.0044 How often will you have a

sustainment IPT with all your partners?

46 1.75% 0.0044 How will you develop a "buy-back" clause for parts and software that is

excess to the government

47 1.75% 0.0044

How will you monitor the global status of all sustainment resources of people, materials and software? (i.e.

in-transit, at location and being disposed/retired)

48 1.75% 0.0044 How will you work with the current

DLA infrastructure to provide support to the PSI Office?

49 25.00% 0.0875

How will you oversee the ability to meet induction schedules at depot by

providing parts supply chain support?


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50 1.50% 0.0038 How will you track the location of fielded systems on a continuous

basis?

51 1.25% 0.0031

How will you access the use of the application software? (i.e. purchase,

hosted, modification to current legacy)

52 1.25% 0.0031

How will you initialize a program for stocked parts that minimizes quality problems such as damage from the

environment?

53 1.25% 0.0031 How will you update the Illustrated Parts Catalog for Maintainers?

54 1.00% 0.0025 What criteria will you use to replace a non-performing member of the PSI

Team?

55 1.00% 0.0025 What will be your strategy to identify DMS parts candidates?

56 3.00% 0.0024

How will you initialize and maintain the classification of "mission critical"

and "non-mission critical" parts records

57 3.00% 0.0024

How will you manage the contracts/MOUs regarding

performance with your suppliers for newly inducted systems?

58 3.00% 0.0024

How will you update Mean Time Between Failure (MTBF) accuracy

and provide information to PSPs/organic organizations for

planning purposes?

59 3.00% 0.0024

What will be the hours of operation of your PSI Office to meet technical requests, hardware and software, from the BCTs and what response

time will you provide once a request is submitted? (for example 24/7,

16/6, or 8/5)

60 3.00% 0.0024

Where will you obtain reliability data from the current Non-PBL construct

and how will you assure that it is accurate?


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61 15.00% 0.0525



62 1.75% 0.0014 At what performance level do you "penalize" a contractor?

63 2.00% 0.0016 How will you convert parts records

from the current Non-PBL program? (qty, loc, condition, etc)

64 2.00% 0.0016 How will you improve dependent demand planning effectiveness of

your suppliers?

65 2.00% 0.0016

Who and how will you analyze "tear-down" reports from your suppliers

that repair LRUs? (i.e. part of reliability improvement program)

66 35.00% 0.0140

How will you address reacting to the resources required to support the

repair of a damaged system due to accident or combat? (i.e.

development of quick deployment kits for specific types of accidents)

67 35.00% 0.0140



68 2.00% 0.0016

How are you to maintain interchangeability/superseded/ substitution files for parts and

software?

69 2.00% 0.0016 How will you initialize a

maintainability improvement program for parts and software?

70 2.00% 0.0016 How will you maintain parts accuracy after conversion from Non-PBL?

71 2.00% 0.0016

How will you provide inputs to the PM for Initial Provisioning quantities for the future fielding of additional

BCTs?

72 2.00% 0.0016 How will you provide oversight for

the systems that are covered under warranty?


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74 1.25% 0.0010

How will you address the problem of Maintainers not returning

unserviceable repairable LRUs in a timely manner?

75 1.25% 0.0010 How will you evaluate the parts

quantity levels established by the ICPs

76 1.25% 0.0010

How will you evaluate whether the Regional Support Center (RSC) is

the most efficient and effective means of system line sustainment?

77 1.25% 0.0010

What criteria will you establish for "insurance" parts? (parts with no

predicted failures, but with long lead-times)

78 0.50% 0.0013 How will you work with the current

depot infrastructure to provide support to the PSI Office?

79 2.00% 0.0016

How will you assure a "credit" from a supplier when a repairable LRU has

prematurely failed after a repair/refurbishment?

80 2.00% 0.0016

How will you assure that the contractor/organic depots have

sufficient parts to meet schedules required to achieve performance

commitments?

81 2.00% 0.0016

How will you audit the % of end-user billets in which MOS's are fulfilled?

(provides driver for CFSR requirements)

82 2.00% 0.0016 How will you calculate parts fulfillment rate for first pass criteria?

83 2.00% 0.0016 How will you calculate retail and wholesale parts footprint?


85 2.00% 0.0016 How will you decide whether a warranty is of best value for the

Government?


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86 2.00% 0.0016 How will you initialize a quality

improvement program at suppliers that increases reliability?

87 2.00% 0.0016

How will you manage situations where a repairable LRU is BER, but

it currently is classified as a DMS/MS part?

88 2.00% 0.0016 How will you minimize inbound-to-wholesale transportation costs for

parts?

89 2.00% 0.0016 What will your criteria for a

unserviceable repairable LRU to be BER?

90 0.90% 0.0007 How will you schedule special training for Maintainers?

91 0.75% 0.0006 How often will you revisit LORA to update previous conclusions?

92 0.70% 0.0006 How will you improve the productivity of Field Software Engineers?

93 0.70% 0.0006 What incentive will you provide to CFSRs to identify ways to improve

system reliability?

94 0.50% 0.0004

Do you plan to use reusable containers for unserviceable

repairable returns? (If yes, how will you manage the container pool)

95 0.50% 0.0004 How will to assure that you have met

Title X Depot workload requirements?

96 0.50% 0.0004 How will you minimize outbound-from-wholesale transportation for

parts?

97 1.00% 0.0008 How will you reduce the unit costs of parts; such as buying not-new parts?

98 0.70% 0.0006

What will be the acceptable performance variance range on a

month-to-month basis with contractor PSPs? (i.e. parts fill rates of +/- from

PBA of 1.5%)

99 100.00% 0.0200

How will you monitor the status of systems in short term storage? (i.e.

being positioned for return from OCONUS to CONUS)


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100 0.0000 How will you value parts/software cannibalized from retired fielded

units?

100.00% 100.00% 100.00% 100.00% 100.00% 100.0% 1.000 Totals


139

Appendix i


140


141

Appendix j

Hypatia MS Excel workbook; submitted at final study


142

Appendix k

IPT members BCA study comments and author responses; last 2 reviews

Item # Org Contact Previous Study Comments Action Employed X Jul 20XX

Study

1 Org1 XXX Fielding quantity change: from 218 to 216

Model changed to reflect impact upon financial reports

2-12 Org X XXX Others Others

Item # Service Contact Previous Study Comments Action Employed X Aug 20XX

Study

1 Org3 XXX Clarify the warranty information. Does it start when the system is fielded, or when it is procured?

All manufacturer warranty for end-items begin at the time of fielding; this is an assumption which may or

may occur. To be discussed between PM Office and its suppliers

2-25 Org X XXX Others Others


143

Appendix l

dod joint weapons system product support business case analysis example

Business

product support processes

giuntini company

xyz weapon system

risk analysis

analysis methods

xyz system pse

sensitivity analysis

bca jipt charter