REDUCING DON TOTAL OWNERSHIP COST: WHY RECENT REFORM INITIATIVES WILL LOWER SUSTAINMENT COSTS AND INCREASE AFFORDABILITY

Abstract

Sustainment costs are the largest portion of total ownership cost (TOC) for ships across the Department of the Navy. Driving down these costs through innovative approaches both in sustainment and acquisition will free up vital resources. This is important to enable reprogramming to support the Navy's shipbuilding goal. With budget constraints, efficiencies must be realized to deliver the battle force required to maintain our naval advantage. This thesis assessed Government Accountability Office findings for Navy ships to determine how improved portfolio management in accordance with Section 809 panel recommendations will improve accuracy of sustainment costs that result in reduction of planned TOC. We found that primary contributing factors of increased TOC are concurrency in technology development, design, and construction, and a lack of advocacy for TOC considerations early in the acquisition process. Accordingly, though Navy ships will always have concurrency as a system of systems, establishing a sustainment program baseline of equal standing with the acquisition program baseline would positively impact TOC through equivalent governance for acquisition and sustainment functions and would ensure sustainment had equal advocacy with acquisition. Improved flexibility and autonomy for reprogramming would help apply funds directly to the Navy's sustainment challenges. When combined, Navy ships can positively influence TOC.