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PAD-78-21 1 (1978-08-16)

handle is hein.gao/gaobacjhj0001 and id is 1 raw text is: DOCUMENT RESUE 06791 - [B23073841 Comparative Life Cycle Cost: A Case Study, PAD-78-21; B-163058. August 16, 1978. 18 pp. Staff stdy by Norton A. Myers, Acting irector, Prcram Analysis Div. issue Area: Alternative Apprcaches or ethods to Achieve Federal Program Objectives (3600). Cotact- Program Analysis Div. -:4qet Function: Natlonal Defense: Weapon Systems (057); Na tional Defense: Department of Cefnse - Procurement & Contracts (058). Orqaization Concerned: Department of Defense; Department of the Arry. Congressional Relevance: House Committee cn Armed Services; Senate Committee on Armed Services* A case study of the costs for two Army tanks, X1-1 and K60A3, demonstrated the importance of life-cycle cost comparisons. The XR-1 main battle tanl was developed tc succevd B60 series tanks which have been prodiced for 17 years. Findinqs/Conclusionv: Comparing only acquisiticn costs, the XE-1 is twice as expensive as the 860A3. When life-cycle costs (totals for buying, operating, and maintaining tanks) during a A-year period are considered, the XR-1 costs about 20% more because of large, nearly equal maintGnance and operaticr costs for the two tanks. Thus, the XE-1 need be only 201 more cost effective, and the consensus of Army studies has been that its cost effectiveness compared to the 860A3 is considerably more than this percentage. Cost estimates made before starting production are subject to uncertainty such as inflation and other factors. Cost estimate assumptions were examined, and the sensitivity of X-i costs to these assumptions was reflected in life-cycle cost data. Wapon systems decisions are not made solely on cost or effectiveness data. For example, NATO weapons standardization programs offer possible economies in research and development and logistics, but other couts may be higher. Foreign military sales can help recoup development costs of weapons syste.3, but the market for these is not highly predictable. JAuthor/HTW)

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