Mr. Randy Fowler | Deputy Assistant Secretary of Defense

1. DoD Affordability and Efficiency Initiatives Mr. Randy Fowler| Deputy Assistant Secretary of Defense Materiel Readiness Logistics FIPT October 8, 2010 10pm30- 1

2. Better Buying Power – Dr. CarterPublished September 14, 2010 Why this effort and why now? “There is every reason to believe the efficiencies we are seeking can be realized. It has taken years for excessive costs and unproductive overhead to creep into our business practices, but over the coming years we can surely work them out again. “ “Those who hesitate to do down the road of great efficiency must consider the alternative: broken or cancelled programs, budget turbulence, uncertainty and unpredictability for industry, erosion of taxpayer confidence that they are getting value for their defense dollar, and above all, lost capability for the warfighter in a dangerous world. Not only can we succeed: we must.” 10pm30- 2

3. “First, is this [DoD inefficiency] respectful of the American taxpayer at a time of economic and fiscal duress? And second, is this activity or arrangement the best use of limited dollars given the pressing needs to take care of our people, win the wars we are in, and invest in the capabilities necessary to deal with the most likely and lethal future threats?” (Secretary Gates) Focus on Affordability “Total ownership costs are part of my requirements and acquisition decisions – we will not buy a ship if it is unaffordable today and we will not buy it if it will be unaffordable over its lifetime.” (ADM Roughead) Affordability: The degree to which the life-cycle cost of an acquisition program is in consonance with the long-range modernization, force structure, and manpower plans of the individual DoD Components, as well as for the Department as a whole. (Defense Acquisition Guidebook, 3.2) 10pm30- 3

4. Insider Insights • Do more without more • Most important initiative, next to supporting the force • Negative consequences of churn • This is not about cutting industry’s profit. This is about buying stuff that costs less. • Gotta make it genetic • Centerpieces of the 23 Initiatives • Affordability up front • Should Cost • Portfolio Management Relentless – “Like a Dog With A Bone!” • Not about savings, about re-directing to warfighter accounts • Not about oversight, but about helping PMs achieve success • It’s not about culture – it’s about behavior • Think, Don’t Write 10pm30- 4

5. Sustainment Funding Interrelationships 10pm30- 5

6. NOTIONAL SYSTEM: “ABC” – MILESTONE A Affordability Targets Trade Excursions Plan TACAIR Portfolio Investment Funding Profile CY FY10$B Today 10pm30- 6

7. NOTIONAL SYSTEM: “ABC” – MILESTONE B Proposed Affordability Requirements Trade Excursions Reductions TACAIR Portfolio Investment Funding Profile CY FY10$B Today 10pm30- 7

8. Shipbuilding Portfolio View FY02-FY11 Carriers Other 10% 11% CLF Subs 11% 10% Sm Sealift CruDes 5% 35% Frigates/MCM Lg Sealift 10% 21% Comparison of Average Procurement Cost (1 ship)FFG 7 + MCM 1 vs. LCS (Seaframe + Average Mission Module) Amphib 11% MCM 1 LCS FFG 7 Frigates/MCM (LCS) Procurement 27% % of Shipbuilding Budget by Ship Mission Type Average for FY02-FY11 LCS Procurement Profile – FY 11 Long Range Shipbuilding Plan SHIPBUILDING SCN + NDSF 35% 10pm30- 8

9. NOTIONAL SYSTEM: “ABC” – MILESTONE C Program Master Schedule (Detived from Contractor IMS Data) Execution Performance (Based on CPR Data) Schedule Delays or Risks: Key or High Risk Deliverables Cost / Quantity / Schedule (CQS) Index (Derived from Program SOW, CPR, IMS) Scope Growth vs. Cost Growth: Quantity Changes: Schedule Issues: 10pm30- 9

10. Affordability/Efficiency Driven Competencies 10pm30- 10

11. Questions/Discussion 10pm30- 11