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This report describes an alternative business model for buying simulations and simulation training. This model seeks to align the financial incentives of industry participants with positive training and technology development outcomes. It proposes to do this by turning what has traditionally been the acquisition of training simulators into a service acquisition (the acquisition of training) with a private sector “tool vendor” marketplace to support it. The report examines the model in light of economic theory and of other business models related to the acquisition of training and simulations. In addition, it reviews academic literature and publicly available information about various simulation training initiatives, and it reports on interviews with those in industry and the Department of Defense with experience in developing, procuring, or using simulations for training. The report characterizes the “old” business model as being both fiscally wasteful and a hindrance to innovation. With the new business model, the DoD would stop buying both tools and training support and buy only training support; also, the DoD would stop buying training support with cost-plus contracts and start buying it on firm-fixed-price contracts. To ensure competition and innovation in the simulation tool market, the new model would separate the training support and tool markets, require compliance with adopted technical standards to guarantee product interoperability, and create a mechanism to inject seed money into the tool market.

Table of Contents

  • Chapter One

    Introduction: The Legacy of JSIMS

  • Chapter Two

    The Alt#4 Solution

  • Chapter Three

    Other Approaches to Buying Simulation Training: Case Examples

  • Chapter Four

    The Economic Underpinnings of Alt#4: Relevant Theory and Literature

  • Chapter Five

    Challenges Facing the Prototype

  • Chapter Six

    Critical Elements of a Prototype Implementation Plan

  • Chapter Seven

    How Will We Know If It Worked? Evaluating Alt#4

  • Chapter Eight

    Conclusions: The Challenges of Expanding Use of Alt#4 Beyond the Prototype

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

This report is part of the RAND Corporation Monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity.

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