Since September 11, 2001, the Department of Defense (DOD) has been engaged continuously in combat. As operations subside and DOD attempts to recapitalize its forces, it faces a different yet extremely critical threat: unsustainable operations and maintenance (O&M) cost growth. O&M costs are skyrocketing, reducing funding available for recapitalization. With major budget cuts looming, DOD must address the root causes of the rising costs.
Several recent studies have attempted to pinpoint the root cause of the huge O&M cost growth. Many have discussed growing healthcare costs and others have dwelled on the increased use of contracted support.
These are only symptoms of the problem, not the root causes. The O&M cost growth is, at its core, due to an underlying culture that does not incentivize development of costeffective solutions. DOD must counter this growth by instituting incentives and rewards that encourage unit-level commanders to accomplish their assigned missions under budget. Effective incentives vary depending on whether DOD is operating at steadystate, in a war, or absorbing a postconflict drawdown. Potential solutions for each case are presented herein