The concept of “should-cost” management was a key component of the first version of the Defense Department’s Better Buying Power program when it was first rolled out almost five years ago.
But the Air Force’s top acquisition official said the idea hasn’t been forgotten: his service has used it to cut programs’ actual costs by an estimated $2 billion over the last several years, with more potential savings to come.
Should-cost is not strictly a new idea in government procurement. It’s been codified in the Federal Acquisition Regulation for decades, but it wasn’t until 2010 that the Pentagon ordered the military services to use it in all of their major acquisitions. In a nutshell, it requires program managers to set-aside the historically-based independent cost estimates that are developed for all big programs and that DoD is required to base its budgets on, and instead, manage their programs according to what they ought to cost.