Investigation into the Ratio of System Operations and Support Costs to Life-Cycle Costs for Department of Defense Weapon Systems

As the arsenal of weapons managed by the Department of Defense (DoD) ages, the country\u27s leadership is forced to make decisions regarding what to do with current and projected funding to maintain military defensive and offensive capabilities. The acquisition community at many levels has stated that O&S costs are about 70 percent of the total life-cycle costs of the average system, the other 30 percent being spent in the acquisition phase. This golden ratio does not appear to come from empirical evidence. There has been little research into the actual ratio of O&S-to-acquisition costs. This research found a significant departure from the golden ratio in currently fielded systems. Using 37 Air Force, Navy, and Joint programs, the average program was estimated to realize around 55 percent of its costs in the O&S phase, though this does not come close to telling the whole story. Significant deviances from this 55 percent average were seen in most of the weapon system categories analyzed due to many factors, such as life expectancy, acquisition strategy, and level of annual sustainment costs. Due to these significant differences, using a single ratio to describe the cost envelope of the average weapon system is not recommended