analysisILS - Analysis of the ILS Costs Associated with the...

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Analysis of the ILS Costs Associated with the Introduction of New Equipments to the Navy The objective of this analysis is to develop a logical, rational methodology to accurately evaluate the life cycle costs associated with the Navy's equipment needs. Because of increasing pressure to minimize costs, the Government (and in particular the Navy) has focused considerable attention on improved efficiency and economies. The analysis technique which is discussed in this report is intended to satisfy these basic goals by: (a) Providing a reproducible, logical, and conservative mathematical model for the assessment of costs associated with objective ILS variables. (b) Providing a consistent criteria to objectively evaluate the cost proposals submitted in competitive procurements where the basis for competition is a performance specification. (c) Providing a rational basis to develop budget and fiscal requirements associated with ILS. This study is intended to identify the variables associated with life cycle support of an equipment and to more specifically identify and quantify those costs which should be considered in the economic analysis relevant to competitive procurement of functionally interchangeable equipments. The vast majority of equipments used by the Navy are procured through performance specifications. This procurement philosophy results in greater flexibility with respect to equipment design and competition, which inherently produces better quality at the lowest possible price. The traditional method for measuring the economic advantage of competition is to compare the difference in procurement prices. This practice is both logical and meaningful for those situations where no follow on logistical support and life cycle costs are anticipated. When follow on logistics support is required, which is the case for most Navy equipments, additional economic considerations must be evaluated to realistically measure the net savings resulting from competition. In accordance with the Federal Acquisition Regulation (Part 14), the Government is authorized to incorporate economic evaluation criteria in procurement contracts. It is proposed that the analysis contained herein be used in the development of an economic evaluation factor for inclusion in competitive procurement contracts where the procurement specification is of a performance vice design nature. Savings resulting from competitive procurement of functionally interchangeable equipments is equal to the actual savings resulting from the equipment procurement minus the costs associated with the increased needs for logistics support. The actual savings resulting from equipment procurement is easily determined in the review of competitive price quotations. The costs related to increased needs for logistics support are a function of the following variables: 1. Cost of Provisioning Technical Documentation 2. Cost of Provisioning
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3. Cost of NSN/APL Maintenance 4. Cost of Training 5. Cost of Technical Manuals
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This note was uploaded on 10/05/2011 for the course THAR 281 taught by Professor Staff during the Fall '07 term at Texas A&M.

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analysisILS - Analysis of the ILS Costs Associated with the...

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