Posted by Applying the Army Fully Burdened Cost of Fuel Methodology to Analyses of Alternatives
Estimating Track
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Abstract:
In the current conflicts in Iraq and Afghanistan, enemies are attacking United States (U.S.) military convoys that transport necessary supplies such as fuel, ammunition, food, and water in an effort to sever logistical resupply routes. Department of Defense (DoD) leadership is concerned about a having a large logistics footprint that supports
U.S. forces because large convoys are attractive targets. Energy inefficiency is one of the main causes of the large logistical convoys. In an effort to eventually decrease the size of the U.S. logistics footprint, DoD leadership is putting into place procedures to better understand military fuel demands and become more fuel efficient. The Fully Burdened Cost of Fuel (FBCF) is one of the metrics DoD is using to quantify the fuel demands of acquisition systems that are being developed and fielded.
The FBCF for an acquisition system is defined as the Defense Energy Support Center (DESC) standard price for fuel plus apportioned costs of the fuel delivery and force protection assets that transport the fuel to the system. The 2009 Defense Acquisition Guidebook requires that all future trade-off analyses for acquisition systems include FBCF estimates. In order to comply with this guidance, cost analysts are being tasked to develop both a wartime and peacetime FBCF estimate for acquisition systems as part of all future Analyses of Alternatives (AoAs).
Since it is a new requirement that has not been implemented to date, incorporating FBCF estimates into AoAs presents challenges. Where does an analyst start when they are required to produce a wartime FBCF estimate? How does an analyst properly apportion fuel delivery and force protection asset costs to an acquisition system? How can FBCF results be displayed so that they will be meaningful to decision makers?
This paper presents the methodology that the Army is developing to incorporate both wartime and peacetime FBCF estimates into AoAs. A description of how the Army FBCF methodology maps to the previously developed seven step Office of the Secretary of Defense Cost Analysis and Program Evaluation (OSD CAPE) FBCF methodology will be provided. Furthermore, the paper discusses some challenges that still must be overcome as FBCF estimating continues to evolve.
Author:
David M. Hull
Office of the Deputy Assistant Secretary of the Army for Cost and Economics (ODASA-CE)
Mr. Hull is a senior Operations Research Analyst for the Office of the Deputy Assistant Secretary of the Army for Cost and Economics (ODASA-CE). He is a member of the Weapons Systems Costing Division and specializes in ground combat and tactical vehicle cost initiatives. Prior to his arrival at Army headquarters, Mr. Hull worked for Calibre, a management and technology services company, where he conducted performance management analysis for ODASA-CE. Prior to that, Mr. Hull spent eight years in the United States Army as a commissioned officer in the Field Artillery. Mr. Hull graduated with a Bachelor of Science Degree in Mathematics from the United States Military Academy in 1996.