Financial Analysis of Outsourcing the Helicopter Combat Support Mission Aboard Military Sealift Command Ships.
Abstract
Department of Defense leaders plan to use outsourcing to reduce operations and maintenance spending and enable them to increase procurement and research and development spending. Even functions once labeled inherently governmental are now being evaluated for outsourcing in the quest to reduce spending. One such function is the Helicopter Combat Support (HC) Mission aboard Military Sealift Command (MSC) ships. This thesis evaluates service contract cost escalation rates and compares them to in-house cost escalation rates. Three Navy service contracts were evaluated, two aircraft maintenance contracts and one aircraft simulator maintenance contract. The purpose was to determine if the escalation rates differed enough to significantly affect DOD's ability to reduce spending through outsourcing. This thesis also determines the total in-house cost to perform the HC mission aboard MSC ships and evaluates commercial alternatives. The purpose is to establish the contract cost at which outsourcing this mission will result in long term cost reduction. This thesis found that service contract costs escalate faster than in-house costs in certain industries. This difference reduces or eliminates anticipated cost savings from outsourcing. The total in-house performance cost of the HC MSC mission was determined for two different options currently under consideration.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1997
- Accession Number
- ADA345577
Entities
People
- Michael D. Mclean
Organizations
- Naval Postgraduate School