Official Clarifies Costs, Affordability Aspects of Products
August 29, 2011
A top defense acquisition official has attempted to clear up confusion on how to assess costs early on in developing a product. The clarification, in a memo, was needed because two key factors to foreseeing future spending seem to conflict.
The process has two stages, wrote Ashton Carter, undersecretary of defense for acquisition, technology, and logistics, in an Aug. 24 memo.
First, defense officials first must figure out how much the Defense Department would have to pay to design a product and then keep it throughout its life cycle. It's called the "affordability as a requirement" analysis. Based on it, officials then must make decisions on designs and various choices to keep the product affordable.
"This is also the time when spending money on efforts to reduce future costs can have the biggest payoff," Carter wrote.