APPENDIX D

SHIP
OPERATING AND SUPPORT
COST ELEMENT STRUCTURE


1.0     MISSION PERSONNEL

    1.1    SHIP PERSONNEL

2.0     UNIT-LEVEL CONSUMPTION

    2.1    SHIP POL

    2.2    REPAIR PARTS/SUPPLIES

    2.3    DEPOT-LEVEL REPARABLES

    2.4    TRAINING MUNITIONS/EXPENDABLE STORES

    2.5    PURCHASED SERVICES

    2.6    OTHER

3.0     INTERMEDIATE MAINTENANCE

    3.1    MAINTENANCE AFLOAT

    3.2    MAINTENANCE ASHORE

    3.3    REPAIR PARTS/SUPPLIES

    3.4    COMMERCIAL INDUSTRIAL SERVICES

    3.5    OTHER

4.0     DEPOT MAINTENANCE

    4.1    SCHEDULED SHIP OVERHAUL

    4.2    NONSCHEDULED SHIP REPAIR

    4.3    FLEET MODERNIZATION

    4.4    EQUIPMENT REWORK

    4.5    NAVAL AVIATION DEPOT

    4.6    OTHER DEPOT

5.0     CONTRACTOR SUPPORT

    5.1    CONTRACTOR SUPPORT SERVICES

6.0     SUSTAINING SUPPORT

    6.1    SUPPORT EQUIPMENT REPLACEMENT

    6.2    CENTRALLY PROVIDED MATERIAL

    6.3    SUSTAINING ENGINEERING SUPPORT

    6.4    SOFTWARE MAINTENANCE SUPPORT

    6.5    SIMULATOR OPERATIONS

    6.6    OTHER

7.0     INDIRECT SUPPORT

    7.1    PERSONNEL SUPPORT

    7.2    INSTALLATION SUPPORT


SHIP
OPERATING AND SUPPORT
COST ELEMENT STRUCTURE DEFINITIONS

1.0 MISSION PERSONNEL

    The mission personnel element includes the cost of pay and allowances for officer and enlisted ship personnel required to perform operation, maintenance, and support duties.

Note: Pay and allowances for officer and enlisted personnel should be based on the standard composite rate, which includes the following elements: basic pay, retired pay accrual, incentive pay, special pay, basic allowance for quarters, variable housing allowance, basic allowance for subsistence, hazardous duty pay, reenlistment bonuses, clothing allowances, overseas station allowances, uniform allowances, family separation allowances, separation payments, and social security contributions.

1.1 SHIP PERSONNEL. The pay and allowances for the full complement of officer and enlisted ship personnel required to perform operation, maintenance, and support duties.

2.0 UNIT-LEVEL CONSUMPTION

    Unit-level consumption includes the cost of fuel and energy resources; operations, maintenance, and support materials consumed at the unit level; stock fund reimbursements for depot-level repair parts and reparables; munitions expended in training; temporary additional duty/temporary duty (TAD/TDY) pay; and purchased services. Purchased services include equipment service contracts, rents, utilities, and communications support for ships. In the case of ships with embarked aircraft, aircraft-related fuel use and other expenses should be estimated separately and not included here.

2.1 POL/ENERGY CONSUMPTION. Represents the cost of petroleum, oil and lubricants (POL), fossil fuel, and fuel additives consumed by a ship for operations and maintenance while underway and not underway. Includes the cost of lubricants, hydraulic oils, and fuel consumed by ship support equipment. Excludes the cost of nuclear fuel usage and fuel usage by embarked aviation units.

2.2 REPAIR PARTS/SUPPLIES. The costs of repair parts and supplies consumed in the operation, maintenance, and support of a ship and installed equipment. Also includes non-maintenance supplies and equipage used by the ship and the ship's crew. Examples include items relating to the health, safety, and welfare of the crew, such as medical and dental supplies, radiation badges, fire protection suits, charts, maps, clocks, etc. Costs need not be identified at the level of detail shown below; the descriptions are offered for illustrative purposes only:

2.3 DEPOT-LEVEL REPARABLES. The unit-level cost of reimbursing the stock fund for purchases of depot-level reparable (DLR) spares (also referred to as exchangeables) used to replace initial stocks. DLRs may include repairable individual parts, assemblies, or subassemblies that are required on a recurring basis for the repair of major end items of equipment.

Note: Defense Management Report Decisions (DMRDs) 901 and 904 of November 1989 proposed the establishment of a Defense Business Operations Fund (DBOF) under which DLRs would be consolidated under stock fund management. The cost of DLRs, previously a free issue to the consumer, must now be funded and budgeted by the resource user. A surcharge is added to the price of DBOF items to recover the cost of stock fund operations.

2.4 TRAINING MUNITIONS/EXPENDABLE STORES. The cost associated with replacing or increasing the stock of expendable stores consumed in training. Includes the cost of live and inert ammunition, training missiles, and pyrotechnics expended by a ship in noncombat operations (such as firepower demonstrations) and training exercises. Also includes submarine-launched strategic missile training firings and expended sonobuoys.

2.5 PURCHASED SERVICES. Includes the cost of printing, computer rental and service, heat, light, power, water, gas, electricity, communications (telephone/teletype), postal services (postage/box rental), laundry services, and rental of boats and port services.

2.6 OTHER. Include in this element any unit-level costs not otherwise accounted for. For example:

3.0 INTERMEDIATE MAINTENANCE

    Intermediate maintenance includes the cost of labor and material expended by a tender repair ship, or equivalent ashore or afloat Intermediate Maintenance Activity (IMA) in the repair and alteration of ship and associated equipment. Intermediate maintenance activities include calibration, repair, and replacement of parts, components, or assemblies, and technical assistance.

3.1 MAINTENANCE AFLOAT. The pay and allowances of military personnel who perform intermediate maintenance from a tender, repair ship, or equivalent afloat Intermediate Maintenance Activity for the repair and alteration of a ship and associated equipment.

3.2 MAINTENANCE ASHORE. The pay and allowances of military personnel who perform intermediate maintenance from a Shore Intermediate Maintenance Activity (SIMA) for the repair and alteration of a ship and associated equipment.

3.3 REPAIR PARTS/SUPPLIES. The costs of repair parts, assemblies, subassemblies, and material consumed by afloat and ashore Intermediate Maintenance Activities (IMAs) in the repair or alteration of a ship and associated equipment.

3.4 COMMERCIAL INDUSTRIAL SERVICES. The burdened costs of accomplishing afloat and ashore intermediate maintenance activities by private contract due to workload limitations at IMAs.

3.5 OTHER. Include in this element any significant intermediate maintenance costs not otherwise accounted for. Examples could include shipping costs (not previously captured) for materials, repair parts, subassemblies, or assemblies.

4.0 DEPOT MAINTENANCE

    Depot maintenance includes the cost of labor, material, and overhead incurred in performing major overhauls or maintenance on a ship and associated equipment at centralized repair depots, contractor repair facilities, or on site by depot field teams. Some depot maintenance actions occur at intervals ranging from several months to several years. As a result, the most useful method of portraying these costs is on an annual basis (e.g., cost per ship per year) or an operating (steaming) hour basis.

Note: The cost of depot-level reparables (DLRs) or exchangeables acquired through DBOF should be reported in element 2.0, Unit-Level Consumption.

4.1 SCHEDULED SHIP OVERHAUL. The labor, material, and ship repair facility overhead costs of scheduled depot maintenance for ships in the operating forces. Includes regular overhaul (ROH) and selected restricted availability (SRA) costs incurred at both public and private facilities.

Note: The ship overhaul element includes labor and material costs (excluding core acquisition) incurred in recoring nuclear-powered ships. The disposition of the replaced core constitutes a separate but significant cost whose impact should be estimated and presented separately as a system disposal cost.

4.2 NONSCHEDULED SHIP REPAIR. The labor, material, and ship repair facility overhead costs of nonscheduled depot maintenance necessitated by casualty, voyage damage, or other unforeseeable occurrences. Covers work that is beyond the repair capability of the ships force. Includes costs incurred under Restricted Availability (RAV) and Technical Availability (TAV) at both public and private facilities.

4.3 FLEET MODERNIZATION. The labor, expendable material, and overhead costs of altering or modifying a ship, or installing equipment to improve the ship's safety, maintainability, or technical characteristics. Includes costs incurred at both public and private facilities. Also includes modifications incorporated by depot field teams. The cost of centrally provided material, modification kits, and modification spares is specifically excluded, as these items are covered in element 6.2 (Centrally Provided Material).

Note: Any changes, alterations, modifications, or other improvements to enhance performance or improve mission capability should be excluded. However, if it is not feasible to distinguish among modifications, then installation costs for all modifications should be included and documented appropriately.

4.4 EQUIPMENT REWORK. The labor, material, and overhead costs of overhaul, rework, or repair of: (1) major ordnance equipment (including fire control equipment, gun mounts, torpedo tubes, missile launchers, and other miscellaneous equipment); (2) hull, mechanical, and electrical (HM&E) equipment (including communications equipment, navigation items, depth detectors, and auxiliary and electrical items); and (3) electronic equipment.

4.5 NAVAL AVIATION DEPOT MAINTENANCE. The labor, material, and overhead costs of depot maintenance performed by the Naval Aviation Depot (NADEP) on catapults, arresting gears, and visual landing aids, and rework on gas turbine engines.

4.6 OTHER DEPOT. Include in this element any significant depot maintenance activities not otherwise accounted for. For example, this could include component repair costs for reparables not managed by the DBOF, second-destination transportation costs for weapons systems or subsystems requiring major overhaul or rework, or contracted unit-level support.

Note: Not all reparable items are acquired through DBOF. Centrally funded accounts may continue to finance items such as classified program DLRs, conventional and nuclear munitions items, and certain cryptologic electronics and telecommunication items.

5.0 CONTRACTOR SUPPORT

    Contractor support includes the cost of contractor labor, materials, and overhead incurred in providing all or part of the logistics support to a ship, subsystems, or associated support equipment. Contract maintenance is performed by commercial organizations using contractor personnel, material, equipment, and facilities or government-furnished material, equipment, and facilities. Contractor support may be dedicated to one or multiple levels of maintenance and may take the form of interim contractor support (ICS), where the services are provided temporarily (usually in the initial phases of a system's operation), or contractor logistics support (CLS), where the support extends over the operational life of a vessel. Other contractor support may be purchased for engineering and technical services (CETS).

5.1 CONTRACTOR SUPPORT SERVICES. Includes the burdened cost of contractor labor, material, and assets used in providing contractor support to a ship, installed equipment, or related support equipment. Depending upon the maintenance concept, the type of contractor support required (e.g., ICS/CLS/CETS) may differ. If CLS is selected as a primary means of support, all functional areas included in the CLS cost should be identified in the cost element documentation.

Note: After the ICS period, the government assumes responsibility for supporting a weapon system. However, contractor support may still be employed in specific functional areas, such as for sustaining engineering, software maintenance, simulator operations, and selected depot maintenance functions. Applicable contractor costs should be reported against these elements in the CES. To avoid double counting, thecontractor support element should be annotated to identify any contractor costs that are reported in other elements.

6.0 SUSTAINING SUPPORT

    Sustaining support includes the costs of procuring replacement support equipment, centrally provided material, modification kits, sustaining engineering, software maintenance support, and simulator operations. War readiness materiel is specifically excluded.

6.1 SUPPORT EQUIPMENT REPLACEMENT. The costs incurred to replace equipment that is needed to operate or support a ship, installed equipment, or other support equipment. The support equipment being replaced (e.g., tools and test sets) may be unique to the vessel in question or it may be common to a number of vessels, in which case the costs must be allocated among the respective vessels.

Note: This element addresses replacement equipment only. The costs of initial support equipment are specifically excluded.

6.2 CENTRALLY PROVIDED MATERIAL.    The cost of centrally provided material and end items required for modifying a ship, installed equipment, related support equipment, and training equipment. Also includes the costs of spares and other material (after production and deployment) required as a result of modifications accomplished as part of a fleet modernization or as a result of equipage changes. The material costs included are those needed to achieve acceptable safety levels, overcome mission capability deficiencies, improve reliability, or reduce maintenance costs. The cost of installation labor is captured in element 4.3, Fleet Modernization.

Note: If not feasible to distinguish between modernization or safety modification installations in element 4.3, all modernization and modification materials and end-item costs should be identified and included in this element.

6.3 SUSTAINING ENGINEERING SUPPORT. The labor, material, and overhead costs incurred in providing continued systems engineering and program management oversight to determine the integrity of a system, to maintain operational reliability, to approve design changes, and to ensure system conformance with established specifications and standards. Costs reported in this category may include (but are not limited to) government and/or contract engineering services, technical advice, and training for component or system installation, operation, maintenance, and support.

6.4 SOFTWARE MAINTENANCE SUPPORT. The labor, material, and overhead costs incurred by depot-level maintenance activities, government software centers, laboratories, or contractors for supporting the update, maintenance and modification, integration, and configuration management of software. Includes operational, maintenance, and diagnostic software programs for the ship, installed equipment, support equipment, and training equipment. The respective costs of operating and maintaining the associated computer and peripheral equipment in the software maintenance activity should also be included. Not included are the costs of major redesigns, new development of large interfacing software, and modifications that change functionality.

6.5 SIMULATOR OPERATIONS. The costs incurred to provide, operate, and maintain on-site or centralized simulator training devices for a ship, subsystem, or associated support equipment. This may include the labor, material, and overhead costs of simulator operations by military and/or civilian personnel, or by private contractors.

Note: On-site simulator operations and maintenance that are an integral part of unit manning and unit consumption should be reported as unit-level mission costs for the system in question. However, the costs of all contract-funded simulator operations and all centralized government simulator operations should be reported in this element.

6.6 OTHER. Include in this element any sustaining support costs not otherwise accounted for. Examples might include the cost of replenishment publications ordered by the ship and the cost of ammunition-handling functions involving onloading/offloading by coastal handling stations and their annexes.

7.0 INDIRECT SUPPORT

    Indirect support includes the costs of personnel support for specialty training, permanent changes of station, and medical care. Indirect support also includes the costs of relevant host installation services such as base operating support and real property maintenance.

7.1 PERSONNEL SUPPORT. Personnel support includes the cost of system-specific and related specialty training for military personnel who are replacing individuals lost through attrition. Also included in this element are permanent change of station costs, and the cost of medical care. Each of these cost elements should be addressed separately. Descriptions are provided below:

Note: The cost of initial course development and training of Service instructors at contractor facilities is normally categorized as a system investment cost. However, the follow-on training costs of military and civilian personnel attending factory schools, as well as the cost of attending Service-conducted schoolhouse specialty training, are O&S costs and should be reported in this element.

Normally, the costs of acquisition for recruiting, accession, and basic military training will not be included. However, if a significant change in Service recruiting and training objectives is required in order to support the system being assessed, then these costs should be addressed.

7.2 INSTALLATION SUPPORT. Consists of personnel normally assigned to the host installation who are required for the unit to perform its mission in peacetime. Include only those additive personnel and other costs that are directly affected by a change in the number of weapon systems and associated mission personnel. Functions performed by installation support personnel include:

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