Cost Impact of DoD Budget Reductions

Increased unit costs resulting from reductions in Department of Defense (DoD) procurement are the major cost drivers in the current and future acquisition of weapons systems. This finding was initially reached in the Independent Cost Estimate (ICE) conducted on the Titan IV Program by the Cost Analy...

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Bibliographic Details
Main Author: Peters, Michael J
Format: Report
Language:English
Subjects:
ACCOUNTING
ACQUISITION
Administration and Management
CONTRACTORS
CONTRACTS
COST ANALYSIS
COST CONTROL OVERSIGHT
COST DRIVERS
DEFENSE METEOROLOGICAL SATELLITE PROGRAM
DEPARTMENT OF DEFENSE
Economics and Cost Analysis
F-22 AIRCRAFT
FIXED COSTS
ICE(INDEPENDENT COST ESTIMATE)
INDIRECT COSTS
INERTIAL UPPER STAGE
LABOR COSTS
Logistics, Military Facilities and Supplies
MILITARY BUDGETS
Military Forces and Organizations
Military Operations, Strategy and Tactics
MILITARY RESEARCH
MILSTAR
OVERHEAD COSTS
Personnel Management and Labor Relations
PROCUREMENT
PROGRAM COSTS
PROGRAM MANAGERS
REDUCTION
TITAN IV MISSILE PROGRAM
TOTAL COST PERSPECTIVE
UNIT COSTS
WEAPON SYSTEMS
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Summary:Increased unit costs resulting from reductions in Department of Defense (DoD) procurement are the major cost drivers in the current and future acquisition of weapons systems. This finding was initially reached in the Independent Cost Estimate (ICE) conducted on the Titan IV Program by the Cost Analysis Division of the Air Force Space and Missile Systems Center. The estimating team commenced its efforts in October 1991 and submitted its report in August 1992. Similar findings have been reached in estimates developed for the following programs: F-22; Milstar; Inertial Upper Stage; and Defense Meteorological Satellite Program. The conclusions drawn from these analyses are that the impact of DoD procurement reductions; results in a 10-15% increase in program cost; affects all major defense programs; and is long term. It is recommended that: DoD should reevaluate its understanding of this phenomenon: review the coordination of government agency oversight on indirect cost expense; and estimate and review program cost from a total cost perspective.