Reduction of Total Ownership Cost (RTOC)

Abstract

The Under Secretary of Defense (Acquisition, Technology & Logistics) defined mission for the Reduction in Total Ownership Cost (RTOC) program as the reduction of ownership costs for defense systems. The RTOC program funds activities and initiatives that will: 1. Increase the reliability, maintainability, supportability--and thus increase readiness--of new or existing defense systems. 2. Reduce logistics footprint. 3. Generate future cost reductions in total ownership cost. Individual Service Projects are complete efforts within themselves that yield complete developments/redesigns which the Services are committed to put into production and operation. The initiatives optimize cost avoidance, ultimately reducing the operating and support costs for systems. Each project is evaluated against a rigorous set of criteria to assess its viability and probability of success. Individual projects address specific Service needs and high Operations and Support (O&S) cost areas. The Department has set a FY 2010 RTOC goal of reducing the total defense systems inflation increase in O&S cost by 30 percent between FY 2004 and FY 2010. This Program Element (PE) provides a major portion of the program funding to achieve this goal. The successful demonstration of the RTOC program initiatives stimulates additional initiatives by the Services to achieve even greater cost avoidances. Individual RTOC Project Management rests with the Services and their Project Managers. Each Service has an active RTOC Point of Contact (POC) for the initial interface between the Office of the Secretary of Defense (OSD) and the RTOC Project Managers. The average Return on Investment (ROI) for FY 2009 projects (based on discounted cash flow calculations) is approximately 45:1 with $1.174 billion in cost avoidances across the life cycle of the affected systems. These cost avoidances will be lost without the requested funding in FY 2010, which is needed to complete the projects begun with FY 2009 funding. The average ROI for these FY 2010 new start projects (based on discounted cash flow calculations) is approximately 80:1 with $1.333 billion in cost avoidances across the life cycle of the affected systems.

Document Details

• Document Type: R2 Budgetary Justification
• Publication Date: Oct 01, 2011
• Source ID: 0605017D8Z_4_0400_PB_2011
• Service Agency Name: Office of Secretary Of Defense

Tags

Communities of Interest

• Advanced Electronics
• Ground and Sea Platforms

DTIC Thesaurus Topics

• Aircrafts
• Birds
• Composite Materials
• Cost Reductions
• Defense Systems
• Engines
• Heat Transfer
• Landing Gear
• Large Aircraft Infrared Countermeasures
• Life Cycles
• Logistics
• Maintenance
• Maintenance Requirements
• Manufacturing
• Materials
• Test And Evaluation
• Turbofan Engines

Readers

• Defense Technology Research and Development.
• Life Cycle Cost Analysis
• Public Financial Management and Budgeting