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This study examined funding instability in Army acquisition programs to determine how it affected those programs. A literature review suggested that funding changes often result in adverse effects, but also revealed that there was no common definition of funding instability. The first step of the project was to create a measure of funding instability, which was then applied to 18 Army programs that had been approved for system development and demonstration (SDD) in the 1980s and 1990s and had at least five years of SDD experience. The first analysis performed sought out relationships between funding instability measures for Army development and procurement programs and measures of adverse outcomes: development cost growth, procurement cost growth, and schedule slippage. A small but positive association between total funding instability and schedule slippage was found in the Army data, but no significant associations between funding instability and adverse outcomes were found. Three case studies were then conducted to look more deeply into how financial instability affects program management. Most funding instability found in the case studies came from two sources: events that occurred outside the control of Army leaders, and ambitious technical goals set by decisions made within the Army. Regardless of the root cause of funding instability, however, its effects showed up as schedule slips, cost increases, and to a lesser degree, technical compromises. The final analysis was of funding instability between fiscal years 2000 and 2004, a period in which external events and transformation programs contributed to funding instability. A comparison of Army programs in this, more recent period with those in the earlier period showed that funding instability had increased in development programs and decreased in procurement programs. A comparison of the experience of the more recent Army programs with that of Air Force programs in the same period revealed generally similar levels of funding instability for the two services.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Quantitative Analysis of Army Programs

  • Chapter Three

    Case Studies of Army Programs

  • Chapter Four

    More-Recent Funding Instability

  • Chapter Five

    Findings

  • Appendix A

    Army Program Descriptions

  • Appendix B

    Air Force Program Descriptions

Research conducted by

The research described in this report was sponsored by the United States Army and conducted by the RAND Arroyo Center.

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