The “2 for 4 in ’12” cost-reduction effort Rear Admiral Butler discusses here reduced the unit acquisition cost of the Virginia–class submarines by almost 20 percent while ensuring operating and support (O&S) costs would remain at least constant. In 2008, as my predecessor, Rear Admiral Dave Johnson, handed over the program to me, the challenge became broader—to analyze total ownership cost (TOC) and determine how best to reduce it.
That year, it became increasingly evident that the Navy was experiencing a TOC increase chiefly because of cost increases in O&S. The Navy chartered a reduction of total ownership cost (RTOC) pilot program under the leadership of Admiral Patrick M. Walsh, the Vice Chief of Naval Operations, and the Assistant Secretary of the Navy for Research, Development, and Acquisition Sean J. Stackley, selecting four acquisition programs as pilots. As one that already had a proven framework for reducing acquisition cost, the Virginia program was a logical choice.