22.214.171.124 Life Cycle Cost (LCC)
LCC is defined as the total cost to the government of
acquisition and ownership of a system over its full life. It includes the cost
of development, acquisition, operation, support, and eventual disposal. Figure
12.8-6 is provided as a guide for the acquisition manager in terms of the
activities that should be performed at each phase of a system's life cycle in
order to minimize LCC. They are quite self explanatory, and, for the
interested reader, are treated in greater detail in Section
From a managerial point of view, for LCC to be successful it
must be an explicit part of the original contract competition. Competition in
system development and production serves to place a "downward pressure" on the
estimates of equipment production costs proposed by competing suppliers.
Recognizing that competition will almost certainly cease to exist at entry
into the production phase of a program, the objective of LCC competition is to
obtain as much assurance as possible prior to production that the selected
equipment will satisfy the requirement for lowest practical life-cycle cost.
To accomplish this, the competitive phases of an LCC program are structured
with emphasis on identifying and reducing the life-cycle cost drivers. In
addition, in a properly planned development program where the participating
contractors are thoroughly briefed on the importance of LCC and where
provisions exist for extensive development testing to validate cost-related
parameters (e.g., reliability), competition serves to induce each contractor
to address cost-risk design problems which would otherwise not be encountered
until after production was underway.