New Approaches to Defense Inflation and Discounting
RAND NATIONAL DEFENSE RESEARCH INST SANTA MONICA CA
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Department of Defense DoD cost analysts must have correct information to generate operations and maintenance OM estimates to support effective decisionmaking. Uniquely positioned under the 2009 Weapon Systems Acquisition Reform Act WSARA to improve and support DoD cost analysis, the Office of Cost Assessment and Program Evaluation CAPE within the Office of the Secretary of Defense asked RAND to assess OM costs associated with several ground vehicles. The RAND researchers perceived a related question that also needed to be addressed How well are current inflation indices and discount rates serving DoD weapon-system program management today Inflation indices and discount rates are necessary tools in DoDs acquisition process, as the final selection of a system is partially based on potential increases in sustainment costs inflation and the present value of future costs discounting. This study assesses the accuracy of the inflation indices and the benefits of the policy guiding discounting and offers recommendations that may assist CAPE in supporting the work of weapon-system program cost analysts.
- Economics and Cost Analysis
- Logistics, Military Facilities and Supplies
- Combat Vehicles