Life Cycle Costing in Defence Acquisition: The Challenges of Transforming Complex Aspirations into Factual Ground Realities

Abstract

Life cycle costing (LCC) is an extremely alluring procurement technique for government contracting professionals in developing countries, given its potential for reducing budgetary outgoes through lowered total cost of ownership during the entire life cycle of procured public assets. However, proper implementation of LCC in a public procurement context inherently requires strict cost visibility, verifiability and contracting discipline during comparative evaluation of proposals as well as during contract administration and implementation, making it an extremely difficult and challenging process, particularly in developing countries with relatively unskilled acquisition workforce and unresponsive legal systems as compared to developed country jurisdictions. Within this background, this short academic note explores certain LCC techniques employed under India’s defence procurement procedures, while also attempting quick comparisons with NATO, US and Canadian guidance on the subject. The underlying intent is to use rigorous academic analysis for the purpose of formulating recommendations for suitable reforms in India that could perhaps also be useful for other developing countries interested in implementing LCC-based procurement for obtaining effectiveness and efficiency in their defence acquisition programmes.