Office of Cost Assessment and Program Evaluation
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| Office of Cost Assessment and Program Evaluation | |
|---|---|
| Name | Office of Cost Assessment and Program Evaluation |
| Formed | 1996 |
| Jurisdiction | United States Department of Defense |
| Headquarters | Pentagon |
| Chief1 position | Director |
| Parent agency | Office of the Secretary of Defense |
Office of Cost Assessment and Program Evaluation The Office of Cost Assessment and Program Evaluation provides independent analysis and assessment of acquisition programs, cost estimates, and alternatives for the United States Department of Defense. It supports senior officials in policy-making and budgetary decisions by producing analytic products that influence defense strategy, procurement timelines, and force structure choices. The office operates at the intersection of program evaluation, systems analysis, and fiscal oversight within the Pentagon and interfaces with a wide array of actors across the Congress of the United States, Office of Management and Budget, and defense industry stakeholders.
History
The office traces its origins to post-Cold War reforms and recurring efforts to strengthen cost-estimating capability after controversies involving programs such as the F-35 Lightning II and the Zumwalt-class destroyer. It was established formally in the 1990s amid organizational changes that included predecessors like the Cost Analysis Improvement Group and functions previously situated in the Under Secretary of Defense for Acquisition, Technology and Logistics. High-profile episodes—such as budget debates over the B-2 Spirit program and congressional inquiries related to the Ballistic Missile Defense Organization—drove congressional legislation that shaped the office’s mandate. Over time, directors appointed from disciplines including economics, operations research, and systems engineering have emphasized analytic rigor, drawing on methods used by institutions such as the RAND Corporation, Congressional Budget Office, and Government Accountability Office.
Mission and Responsibilities
The office’s mission centers on independent cost assessment, program evaluation, and comparative analysis of acquisition options for senior defense leaders. It provides cost estimates for major defense acquisition programs, conducts independent analyses of alternatives between platforms like Arleigh Burke-class destroyer and Zumwalt-class destroyer or between aircraft such as the F/A-18E/F Super Hornet and the F-35 Lightning II, and evaluates lifecycle affordability for systems including the Columbia-class submarine and the Virginia-class submarine. The office supports Secretary of Defense decision-making on issues touching force structure decisions, modernization plans, and readiness investments. It also prepares documentation used by the Defense Acquisition Board and contributes to analyses for Program Executive Offices and Combatant Commands such as U.S. Northern Command and U.S. Indo-Pacific Command.
Organizational Structure
Organizationally, the office reports to the Office of the Secretary of Defense and is led by a civilian Director, often supported by deputy directors drawn from Department of Defense components and civilian agencies. Components include divisions for cost estimating, modeling and simulation, policy analysis, and program evaluation. The office coordinates with counterpart organizations such as the Defense Contract Management Agency, Defense Business Board, and the Service Cost Agencies of the United States Army, United States Navy, and United States Air Force. It also partners with external analytic entities including National Academy of Sciences panels and the Center for Strategic and International Studies for peer review and methodological development.
Key Functions and Methodologies
Core functions include independent cost estimates (ICEs), analyses of alternatives (AoAs), lifecycle cost modeling, and affordability assessments for major defense acquisition programs. Methodologies rely on parametric estimating techniques, analogy-based cost models, discrete-event simulation, and probabilistic risk assessment as practiced in studies by RAND Corporation and scholarly work from institutions such as Massachusetts Institute of Technology and Stanford University. The office uses databases tracking historical costs from platforms like the M1 Abrams and AH-64 Apache to calibrate models, and it employs software suites for Monte Carlo simulation, Earned Value Management integration, and systems engineering trade-space exploration. It also adopts standards promulgated by entities such as the American Institute of Aeronautics and Astronautics and references legislative frameworks including the Clinger–Cohen Act that affect acquisition planning.
Notable Assessments and Reports
The office has produced influential assessments that affected procurement decisions on programs like the F-35 Lightning II, the Ground Based Strategic Deterrent, and shipbuilding plans involving the John F. Kennedy (CV-67) class carrier modernizations and subsequent carrier programs. Its independent cost estimates have been cited in congressional hearings involving panels such as the Senate Armed Services Committee and the House Armed Services Committee. Analyses have also informed debates over programs including the KC-46 Pegasus tanker, the Terminal High Altitude Area Defense system, and sustainment plans for the C-17 Globemaster III. Reports by the office have been the basis for defense budget justifications reviewed by the Office of Management and Budget and for oversight actions by the Government Accountability Office.
Oversight, Criticism, and Reforms
The office’s independence and methodologies have faced scrutiny from Members of Congress, inspectors general such as the DoD Inspector General, and external watchdogs including the Government Accountability Office. Criticisms have addressed optimistic assumptions, model transparency, and interagency coordination, sometimes prompting reforms in analytic standards, data sharing agreements with the Defense Logistics Agency, and enhanced peer review protocols involving the National Research Council. Legislative responses have included mandates for greater transparency and periodic audits tied to the National Defense Authorization Act. Reforms have sought to strengthen the office’s analytic staff with hires from economics, operations research, and computer science and to institutionalize best practices from academic and private sector organizations like Harvard University and the Institute for Defense Analyses.