UPDATE Air Force

Requirements ]P

Rp ' u Plan

! ILS Plan

- Validation Phase LCC

Procedures Trade Studies

- Cost of Ownership Refinement - Refinement of the Acquisition

Approach

- LCC Verification Test Plan

Fig. 14. Demonstration and Validation Phase Requirements and Procedures

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breaking the weapon system down into individual oystems and subsystems.

LCC Activities During the Full Scale Engineering Development Phase

For the working level LCC manager, the require-ments of this phase change slightly from previous phases.

The original MENA, updated PMD and AFSC Form 56 indicated the support concept of the weapon system. Up until this phase, however, the weapon system has been a basically hand-built prototype with minimal support equipment and technical data. In the Full Scale Engineering Development Phase the working level LCC manager must ensure that the weapon system has the most LCC-effective support plan

pos-sible. This requires that support equipment be, to the highest degree possible, existing Air Force common support equipment. The contractor will likely have developed spe-cialized test and diagnostic equipment by this phase in order to validate parts of his design and establish con-tract performance. The temptation will be to procure this type of specialized support equipment for the operational

system support role. This decision should not be made until all avenues of common test equipment have been fully

investigated and the reliability and maintainability of the specialized contractor test equipment assessed. Several of the techniques detailed in Chapter IV are essential to the working level LCC manager in designing an efficient and

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effective support system. One such technique is Optimum Repair Level Analysis (ORLA), which is used to assign

system components (LRUs and SRUs) to the most economical repair levels of maintenance (field, intermediate, depot, etc.) (29). Another is Logistics Support Analysis (LSA) which provides the necessary data for support system

deci-sions. This data is obtained from the contractor on a Logistics Support Analysis Record (LSAR). The LSAR will

be available in automated form from the AFALD/PTA Product Performance Feedback System in the near future. In the interim, the working level LCC manager should require con-tractors to automate the LSAR and make it available elec-tronically to the Program Office for analysis.

Failure Modes and Effects Analysis is particularly important at this point, in that peculiar test equipment design and special maintenance procedures can be designed in light of specific failure patterns.

In this phase the overall cost of the weapon system should be refined with the detailed logistics and engineer-ing parameters available on the weapon system components and support equipment, as well as knowledge of level of repair, spares costs and manpower requirements. LCC models, Engineered Cost Estimating, Industrial Engineering Standards and Sensitivity Analysis are useful techniques for refining the cost estimate for the weapon system during this phase.

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During the Conceptual Phase, the Acquisition Plan, a strategy for dealing with the contractor, was developed in general terms. The design of the RFP, criteria for Source Selection, and negotiation tactics implemented this overall strategy. In the Full Scale Engineering Develop-ment Phase the working level LCC manager must take an active

part in Source Selection and contract negotiations so as to hold the line on system LCC. Because of the expense of

having more than one contractor continue through Full Scale Engineering Development, usually only one contractor is selected to continue into the Production Phase. This

places the contractor in a very good "sole source" negotia-ting.position. Since the forces of competition are not present to hold down production contract costs, other niques must be substituted. One of the most effective tech-niques is a combination of contract warranties and guaran-tees that specify target production parameters (MTBF, etc.) and the rewards or penalties for attaining/missing those parameters. In order to successfully implement such con-tractual techniques, the working level LCC manager must ensure that adequate test procedures are devised to mea-sure the actual logistics parameters in production.

Another relevant technique is Learning Curve

Analysis. By anticipating the decreasing rate of contrac-tor production costs on cumulative units of output, as

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larger quantities are produced, the government can negoti-ate lower and more realistic production costs.

During this phase the final details of the post-production LCC testing procedures (Verification Test) should be negotiated with the contractor. The objective of the post-production test is to gather logistics data on the mature, operational system for comparison to pre-viously negotiated targets. The feedback from this test can be used to validate or modify LCC techniques, reward the contractor for exceptional performance, or force the contractor to correct or pay for deficiencies (within nego-tiated limits). This type of test-feedback-action has not yet been implemented in a major weapon system acquisition.

The F-16 post-production test is st.heduled to commence in the near future and should provide practical lessons on the usefulness of the technique.

The final concern of the working level LCC manager during this phase is the evaluation of engineering change proposals (ECPs). ECPs this late in the development of the weapon system must be screened with additional rigor for benefit above the cost they required. LCC models, Cost-Benefit Analysis, and Sensitivity Analysis are useful tech-niques for evaluating the impact of these baseline changes.

The Full Scale Engineering Phase chart (Figure 15) summarizes the requirements and relevant procedures that the LCC manager is concerned about during this phase.

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Requirements RFP Plan ECP

SLC

Fig. 15. Full Scale Engineering Development Phase Requirements and Procedures

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