Thursday, July 9, 2009

Seven Step FBCF Methodology and the JLTV

A search yesterday on FBCF (the Fully Burdened Cost of Fuel) yielded this recent Powerpoint from the Army's Office of Deputy Assistant Secretary of the Army-Cost and Economic (ODASA-CE) from the DOD Cost Analysis Symposium (DODCAS) held earlier this year.

The source is the OSD-PA&E methodology defined in a Director of OSD-PA&E memorandum dated 11 July 2007. Each of these steps warrants a drill down in future posts, but for now, here's the structure:
Seven-Step OSD PA&E FBCF Methodology
  1. Commodity Cost of Fuel - the Defense Energy Supply Center (DESC) standard price for the appropriate type or types of fuel
  2. Primary Fuel Delivery Asset O&S Cost - the cost of operating service-owned fuel delivery assets including the cost of military and civilian personnel dedicated to the fuel delivery mission
  3. Depreciation Cost of Primary Fuel Delivery Assets - a measurement of the decline in value of fuel delivery assets with finite service lives using straight-line depreciation over total service life
  4. Direct Fuel Infrastructure O&S and Recapitalization Cost - the cost of fuel infrastructure that is not operated by DESC and directly tied to energy delivery
  5. Indirect Fuel Infrastructure O&S Cost - the cost of base infrastructure that is shared proportionally among all base tenants
  6. Environmental Cost - the cost representing carbon trading credit prices, hazardous waste control and related subjects
  7. Other Service & Platform Delivery Specific Costs - this step includes potential costs associated with delivering fuel such as convey escort, force protection, regulatory compliance, contracting, and other costs as appropriate
The Army is out in front bringing these methods to its JLTV program, and pledging to share its lessons learned with the other services. It's good to see evidence that some of the guidance from the two DSB Energy Task Force reports as well as the most recent NDAA is being acted upon.

Photo: Lockheed Martin

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