Reduction of Total Ownership Cost (RTOC)

Abstract

The Under Secretary of Defense (Acquisition, Technology & Logistics) defined the mission for the Reduction in Total Ownership Cost (R-TOC) program as the reduction of ownership costs for defense systems. The R-TOC program funded activities and initiatives that: 1. Increased the reliability, maintainability, supportability--and thus increased readiness--of new or existing defense systems. 2. Reduced logistics footprint. 3. Generated 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 optimized cost avoidance, ultimately reducing the operating and support costs for systems. Each project was evaluated against a rigorous set of criteria to assess its viability and probability of success. Individual projects addressed specific Service needs and high Operations and Support (O&S) cost areas. The Department set a FY 2010 R-TOC goal of reducing the total defense systems inflation increase in O&S cost by 30 percent between FY 2004 and FY 2010. This PE provided a major portion of the program funding to achieve this goal. The successful demonstration of the R-TOC program initiatives stimulated additional initiatives by the Services to achieve even greater cost avoidance. In FY12 the program devolves to the Services. Individual R-TOC Project Management will continue to rest with the Services and their Project Managers after being devolved. Each Service has an active R-TOC Point of Contact (POC) for the initial interface between the Office of the Secretary of Defense (OSD) and the R-TOC Project Managers. The average Return on Investment (ROI) for FY 2010 projects (based on discounted cash flow calculations) is approximately 80:1 with $1.333 billion in cost avoidance across the life cycle of the affected systems. The average ROI for the FY 2011 projects (based on discounted cash flow calculations) is approximately 53:1 with $2.049 billion in cost avoidance across the life cycle of the affected systems.

Document Details

• Document Type: R2 Budgetary Justification
• Publication Date: Oct 01, 2012
• Source ID: 0605017D8Z_4_0400_PB_2012
• Change Summary Explanation: Defense Efficiency – Baseline Review. As part of the Secretary of Defense's efficiency reform agenda for the Department, a zero-based review of the organization's programs to align resources to the most critical priorities and eliminate lower priority functions was performed. As part of this initiative, the R-TOC program will be terminated in FY12.
• Service Agency Name: Office of Secretary Of Defense

Tags

Communities of Interest

• Advanced Electronics
• Ground and Sea Platforms
• Materials and Manufacturing Processes
• Weapons Technologies

DTIC Thesaurus Topics

• Aircrafts
• Anti-Tank Missiles
• Condition Based Maintenance
• Control Systems
• Costs
• Defense Systems
• Landing Gear
• Life Cycles
• Logistics
• Maintainability
• Maintenance
• Maintenance Costs
• Maintenance Requirements
• Navy
• Storage
• Test And Evaluation
• Unmanned Aerial Systems

Readers

• Defense Technology Research and Development.
• Life Cycle Cost Analysis