Total Ownership Cost (TOC)
is defined as the sum of all system costs including research, development,
acquisition, operation and support (O&S), deactivation and disposal.Historically, O&S costs are
approximately
75% of the budget of a system. Based on current projections, the
Department of Defense budget will
remain nearly constant with only inflationary
growth for the foreseeable future. Therefore, when new,
more capable systems
are needed, they must be funded by reducing expenditures (primarily O&S) on
active programs.The Navy recognizes
this budgetary reality. Therefore, TOC must be a controlling
factor in system
design for all new acquisition programs.TOC reduction is not just "buying from the
low bidder" at each
stage; it involves a long-term view of system employment and sustainment that
seeks to recognize opportunities to minimize and/or optimize ownership costs
versus operational characteristics right from the start.
Therefore, the Supplier must design out maintenance drivers and design in high inherent reliability.
The Supplier must select materials and components that minimize maintenance
demands.Maintenance analysis,
predicated on the increased application of Condition-Based Maintenance (CBM)
and the shift of time-directed to condition-directed tasks shall lead to the
establishment of a reduced set of Corrective Maintenance (CM) and Preventive
Maintenance (PM) tasks. Corrective and preventive maintenance tasks should use CBM and Reliability Centered Maintenance (RCM) analysis.
