independent cost estimate | The Contracting Education Academy

December 23, 2015 By AMK

OPM’s post-hack contract broke rules and put millions of dollars at risk

In the rush to award a $20 million contract for identity-theft protection services in the wake of a massive data breach, Office of Personnel Management contracting staff violated federal contracting rules, lost track of paperwork and failed to properly secure an independent cost estimate of the contract, according to a newly published review by the agency’s inspector general.

A summary of the IG’s findings was previously included in a memo to acting OPM Director Beth Cobert last month. However, the full report, dated Dec. 2 and posted online today, provides more detail about the shortcuts OPM contracting staff to award the contract.

OPM IG Patrick McFarland said his office was unable to determine whether the deficiencies were significant enough to affect the actual awarding of the contract. However, the missteps his office identified “increased the risk of making an improper award,” he wrote in the new review.

Keep reading this article at: http://www.nextgov.com/cybersecurity/2015/12/opm-rushed-award-20m-post-hack-contract-and-ran-afoul-federal-contracting-rules-ig-says/124369

March 30, 2015 By AMK

Pentagon: The cost of major weapon systems are finally coming down

More than four years since Ashton Carter took on reforming Pentagon acquisition, the cost of the largest arms projects is beginning to stabilize, defense officials say.

Costs among the Defense Department’s largest arms programs are beginning to stabilize after years of overruns, a recent trend that Pentagon officials say is the result of an improvement project launched by now-Defense Secretary Ashton Carter more than four years ago.

Nearly 70 percent of the Pentagon’s 80 major procurement projects – valued at $1.6 trillion – are performing better than anticipated, and in many cases, have reduced costs compared to one year ago, said one senior Pentagon official who was not authorized to speak publicly.

“I think this is a good example compared to last year and then I think you’ll see it again,” the official said.

Costs are down because the military services have become more realistic when laying out schedules and funding for projects, according to the official. They are also doing a better job of making sure projects fit in long-term budget plans.

Keep reading this article at: http://www.defenseone.com/management/2015/03/pentagon-cost-major-weapons-systems-are-finally-coming-down/108000/

July 16, 2014 By AMK

Quality cost data is key to making better management decisions

Cost estimating may not be as exciting as the new baseball season or the competition on American Idol, but for anyone in management, it is absolutely vital, if somewhat less entertaining. Especially if you’re involved in program management, procurement or finance you rely on high quality cost estimates every day. Why? Because they provide the foundation for informed decision-making.

As such, it’s essential for managers to be able to distinguish between two important, but very different (and often confused) types of cost estimates: life cycle cost estimates (LCCEs) and independent government cost estimates (IGCEs).

This table compares and contrasts the two types of estimates, to help decision-makers determine which one they need to utilize.

Life cycle cost estimates take a comprehensive view of a program. They include all costs, whether incurred by the government or the contractor, including labor, materials, facilities, hardware, software and integration costs, and sometimes even imputed costs. Life cycle cost estimates can be for 30 years or more. For high dollar programs, LCCEs are required by many government agencies at various acquisition milestones. For example, on very large programs the Defense Department requires LCCEs at three milestones before projects can proceed. Given the scope and duration of LCCEs, they are treated as living documents that should be updated annually.

Keep reading this article at: http://www.govexec.com/contracting/2014/07/quality-cost-data-key-making-better-management-decisions/87946/

April 7, 2014 By AMK

F-35’s operating cost to decline, says DoD acquisition chief

The Pentagon will decrease its $1.1 trillion estimate for the cost of supporting Lockheed Martin Corp. (LMT)’s F-35 fighter jet over a 55-year lifespan, the top U.S. weapons buyer said.

“It will drop to a number that’s not trivial but is not as much” a reduction “as I would like,” Frank Kendall, the Defense Department’s undersecretary for acquisition, said April 3, 2014 at a Bloomberg Government breakfast in Washington.

While debate over the aircraft, the costliest U.S. weapons system, has focused mostly on the price to develop and build the fighter, Pentagon agencies also have disputed its long-term operating costs, from spare parts to repairs.

Kendall declined to elaborate on the reduced 55-year estimate by the department’s independent cost-assessment office. The figure will be released later this month in its next unclassified Selected Acquisition Report. Until then, the official projection is the $1.1 trillion formulated by that office three years ago.

By contrast, the Pentagon’s F-35 program office estimates that the fleet will cost $857 billion to operate and support over its lifetime.

On the separate cost of developing and producing a planned fleet of 2,443 F-35s, the U.S. Government Accountability Office said in February that its projection is $390.4 billion, as adjusted for inflation over the years the plane is produced. The Pentagon’s latest estimate by the same measure is $391.2 billion, about a 1.1 percent reduction from an earlier calculation.

Keep reading this article at: http://www.bloomberg.com/news/2014-04-03/lockheed-f-35-s-operating-cost-estimate-to-decline.html

More than four years since Ashton Carter took on reforming Pentagon acquisition, the cost of the largest arms projects is beginning to stabilize, defense officials say.

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