$
I’M A FIRM BELIEVER IN A CULTURE THAT IS VERY CONSCIOUS OF … CONTROLLING COSTS. … IT’S A FUNDAMENTAL PART OF OUR JOB TO DO THAT, CONTROLLING COSTS. WE NEED
A STRONG SENSE OF STEWARDSHIP OF THE TAXPAYERS’ DOLLARS.”
against that as a program manager, chief engineer, or whatever.”
ACHIEVING AFFORDABILITY Affordability is more than just a smart acquisition cost, Kendall noted. It relates both to starting programs and to sustain- ing them through the life cycle—in other words, “not starting down a path that isn’t going to have a future.” Along that path lie numerous programs that ended up being canceled, he said, programs “that we shouldn’t have started, that weren’t affordable when we started them.”
The next step is “to discipline ourselves to control programs. It means we have to trade away requirements. … We’ve got to make sure we’ve got a cost cap on our pro- grams that we’re going to enforce.”
As someone involved in reviewing the minute details of major acquisition pro- grams, Darlene J. Costello agreed. In this fiscal environment, “we can’t afford to birth programs that aren’t ready to be executed as planned and don’t have fund- ing in place and budgeted across their life cycle. So we are looking at programs from birth to when they retire,” said Costello, Principal Director, Strategic and Tactical Systems and Director, Acquisition and Program Management in the Office of the USD(AT&L).
Costello was part of a panel on Overarch- ing Integrated Product Teams (OIPTs), which provide oversight and review of major acquisition programs as they pro- ceed through the acquisition life cycle. OIPTs include the program manager (PM), the PEO, Component Staff, Joint Staff, USD(AT&L) Staff, and Office of the Secretary of Defense staff principals or their representatives.
WILL COST/SHOULD COST The will cost/should cost acquisition management strategy championed by Carter has raised many questions, as the PEO/SYSCOM conference made clear.
“That’s been the biggest challenge for most programs as they’ve come through the process over the last year,” noted Costello, who explained the will-cost and should-cost concepts this way: Will-cost represents what a program would cost “if you didn’t do anything more. … We have historically trended in that direc- tion, without aggressive action being taken on a regular basis” to contain costs. Should-cost, by contrast, “is what it could cost—and hopefully should cost, in this budget environment—if we take some positive action,” such as chang- ing a contract type or using a different technology, production-line philosophy, or build rate.
Costello acknowledged that PMs should not expect the money saved to come back to their programs. “I know program man- agers like to have that money and use it in the future… but as you’re able to save money, we can give it back to the defense enterprise. Hopefully it stays within your service … but depending on how much you save, it might have to go elsewhere. … I do think it is unfortunately just a reality,” she said.
From Kendall’s perspective, should-cost is still a work in progress. “Essentially it’s the idea that you set yourself a target that’s below the independent cost estimate and drive your cost down—look consciously, look consistently, and look continuously for ways to reduce cost. I don’t think should-cost has quite gotten where it needs to be yet. … I think there’s a reluc- tance to set targets that we need to meet.”
EMPLOYING INCENTIVES The smart use of incentives is central to getting a better product for the warfighter, Kendall said. “I think incentives are about the only thing we can do to get industry to perform better, which is really one of our fundamental jobs in the government. … Industry’s trying to do as good a job as it can up to a point, but if we apply incen- tives well, we can get a little bit more out of that equation.”
ASC.ARMY.MIL 121
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EFFICIENCIES
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