Carter Issues Guidance on Developing ‘Should-cost’ Tools

Undersecretary of Defense for Acquisition, Technology and Logistics Ashton Carter, Photo: Defense.gov

The Defense Department’s acquisition czar Ashton Carter released guidance last week on an internal management tool that aims to better estimate the costs of major weapons programs.

In the memo, obtained by Federal News Radio, Carter explains the “will-cost” vs. “should-cost” distinction — which was first laid out as an internal management tool in September to ensure program managers make improvements in productivity — will continue to drive cost-savings.

The memo reiterates that programs managers will develop, track and report costs using should-cost guidance, using all DoD resources at their disposal to create such an estimate.

Meanwhile, DoD acquisition executives should develop incentive plans to reward managers who adhere to the should-cost estimates, according to the memo.

An attachment to the memo provides specifics for developing a should-cost strategy: scrutiny of the program; challenging contractors’ indirect costs; tracking cost, schedule and performance trends; and benchmarking using similar program.

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