Cost Growth in DoD Major Programs: A Historical Perspective
Research rept. Aug 1992-Apr 1993
INDUSTRIAL COLL OF THE ARMED FORCES WASHINGTON DC
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Cost growth in major weapon systems has been an enduring problem in the Department of Defense DoD for the last three decades. This research project provides a historical perspective of that problem, based on a review of thirty-three cost growth reports, articles, and studies published between 1965 and 1992. It examines cost growth both from the congressional perspective and the DoD perspective. Over the years, many qualitative assessments of the factors that cause cost growth have been identified. DoD has acted on these findings and implemented numerous initiatives aimed at combating cost growth. Although DoD has had some limited success, cost growth is still a significant problem. General Accounting Office GAO reports indicate the average cost growth in major DoD acquisition programs is 40-50 when compared to the initial planning estimate made during Concept Exploration and Development. When compared to the development estimate made before Engineering and Manufacturing Development, the average cost growth is 20-30. Both RAND and the Institute for Defense Analysis IDA have completed numerous cost growth studies for DoD. These reports have attempted to quantify the factors that cause cost growth during the Engineering and Manufacturing Development phase of the acquisition cycle. Like the GAO results, they report average cost growths from 20-50 The report provides four recommendations for DoD to implement in its battle with cost growth.
- Administration and Management
- Economics and Cost Analysis
- Defense Systems