LIFE CYCLE COSTING IN EQUIPMENT PROCUREMENT

THE ARMED SERVICES PROCUREMENT ACT STATES THAT AWARD SHALL BE MADE...TO THE RESPONSIBLE BIDDER WHOSE BID...WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. NEVERTHELESS, AWARD OF CONTRACTS ON THE BASIS OF PRICE ALONE CONTINUES TO BE THE PREDOMINANT PRACTICE BY AN OVERWHELMING PROPORTION. DOD MANAGEMENT HAS BECOME INCREASINGLY CONCERNED OVER THE MILITARY, TECHNICAL, AND ECONOMIC CONSEQUENCES OF SUCH PRACTICE. A DOD LIFE CYCLE COSTING TEST PROGRAM WAS LAUNCHED ON THE AWARD OF CONTRACTS FOR REPARABLE EQUIPMENTS ON THE BASIS OF TOTAL LIFE COSTS (PURCHASE PRICE PLUS CONTINUING COSTS OF OPERATION, MAINTENANCE, AND SUPPORT), AND FOR NON-REPARABLE EQUIPMENTS ON THE BASIS OF LOWEST PRICE PER UNIT OF SERVICE LIFE (E.G., MILE, OPERATING HOUR, CALENDAR MONTH) WHERE SERVICE LIFE IN EXCESS OF THE MINIMUM REQUIRED IS USEFUL. APPROXIMATELY TWO HUNDRED TEST PROCUREMENTS HAVE BEEN GENERATED TO DATE. PRIVATE COMPANIES AND INDUSTRY ASSOCIATIONS WERE INVITED TO PARTICIPATE. SINCE THE INITIATION OF THE TEST PROGRAM, A GREAT VARIETY OF QUESTIONS HAVE BEEN ASKED BY BOTH GOVERNMENT AND INDUSTRY PERSONNEL. THE THIRTY-FIVE QUESTIONS WHICH HAVE BEEN ASKED MOST FREQUENTLY ARE ANSWERED. FOLLOWING THE QUESTIONS AND ANSWERS. SYNOPSES OF A FEW OF THE TEST PROCUREMENTS ARE PRESENTED. /BPR/

  • Supplemental Notes:
    • Supp Report, TASK 66-3
  • Corporate Authors:

    Logistics Management Institute

    2000 Corporate Ridge Road
    McLean, VA  United States  22102
  • Publication Date: 1967-2

Subject/Index Terms

Filing Info

  • Accession Number: 00201375
  • Record Type: Publication
  • Source Agency: Traffic Systems Reviews & Abstracts
  • Files: TRIS
  • Created Date: May 5 1970 12:00AM