Root Cause Analyses of Nunn-McCurdy Breaches, Volume 2

Excalibur Artillery Projectile and the Navy Enterprise Resource Planning Program, with an Approach to Analyzing Complexity and Risk

by Irv Blickstein, Jeffrey A. Drezner, Martin C. Libicki, Brian McInnis, Megan McKernan, Charles Nemfakos, Jerry M. Sollinger, Carolyn Wong

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Research Questions

  1. What caused the cost overruns in the Navy Enterprise Resource Planning program?
  2. What caused the cost overruns in the Excalibur program?
  3. What is the best way to identify program components most at risk of causing overall program failure?

Abstract

Congressional concern with cost overruns, or breaches, in several major defense acquisition programs led the authors, in a partnership with the Performance Assessments and Root Cause Analysis Office in the Office of the Secretary of Defense, Acquisition, Technology, and Logistics, to investigate root causes by examining program reviews, analyzing data, participating in contractor briefings, and holding meetings with diverse stakeholders. In a companion study, the authors investigated cost overruns in four programs. The current study analyzes cost overruns in the Navy Enterprise Resource Planning (ERP) program and Excalibur (a 155mm extended-range guided artillery projectile). In addition, it develops some exploratory concepts of program risk and complexity as factors in the management of program acquisition. In spite of the cost growth associated with the ERP program, it can be considered a qualified success. The program was re-baselined in 2006 and, since then, costs have stabilized and production delays have been limited. The authors determined that the primary driver of cost increases in the Excalibur program was the change in procurement quantities, specifically, a 79 percent reduction in rounds ordered. Inaccurate cost estimates, changes in concepts and technology, and urgent operational needs also contributed to the overruns.

Key Findings

Although the Navy Enterprise Resource Planning program suffered from cost growth and significant schedule slippage, the program can be considered a qualified success.

  • The use of pilot projects contributed to the program's success.
  • Cost-plus contracting also had a positive effect.
  • Also contributing to program success was a willingness to rely on the managerial and technical expertise of civilian cadres.

Change in procurement quantities was the main cause of the cost increase in the Excalibur program, but other factors played a role.

  • The number of Excalibur rounds ordered was reduced 79 percent.
  • The precision of the Excalibur round meant that fewer were needed.
  • Inaccurate cost estimates for the program contributed to cost growth.
  • A concept and technological change also contributed to cost growth.

Program complexity hinders visibility into programs.

  • Evidence of pending program breaches was clear, but the indications were buried in program documentation.

Recommendations

  • Researchers should employ set of core activities vital to a successful root cause analysis.
  • Program managers need to be able to focus on the elements of a program most likely to lead to a breach.
  • Investigators need to consult many sources of data to compile, understand, and interpret key events in a program's history.
  • Use of a generic root cause methodology, developed by the authors, will be instrumental to a successful analysis.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Excalibur

  • Chapter Three

    The Navy Enterprise Resource Planning Program

  • Chapter Four

    Examination of Program Complexity

  • Chapter Five

    Assessment of Technical Risk in Weapons Programs

  • Chapter Six

    Concluding Observations

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

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