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Is Weapon System Cost Growth Increasing?

A Quantitative Assessment of Completed and Ongoing Programs

by Obaid Younossi, Mark V. Arena, Robert S. Leonard, Charles Robert Roll, Jr., Arvind Jain, Jerry M. Sollinger

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In recent decades, there have been numerous attempts to rein in the cost growth of U.S. Department of Defense (DoD) acquisition programs. Cost growth is the ratio of the cost estimate reported in a program’s final Selected Acquisition Report (SAR) and the cost-estimate baseline reported in a prior SAR issued at a particular milestone. Drawing on prior RAND research, new analyses of completed and ongoing weapon system programs, and data drawn from SARs, this study addresses the following questions: What is the cost growth of DoD weapon systems? What has been the trend of cost growth over the past three decades? To address the magnitude of cost growth, it examines cost growth in completed programs; to evaluate the cost growth trend over time, it provides additional analysis of a selection of ongoing programs. This sample of ongoing programs permits a look at growth trends in the more recent past. Changes in the mix of system types over time and dollar-weighted analysis were also considered because earlier studies have suggested that cost growth varies by program type and the cost of the program. The findings suggest that development cost growth over the past three decades has remained high and without any significant improvement.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Data and Methodology

  • Chapter Three

    Cost Growth of Completed Programs

  • Chapter Four

    Trends in Cost Growth for Completed Programs

  • Chapter Five

    Cost Growth of Ongoing Programs

  • Chapter Six

    Is the Cost Growth Trend Increasing?

  • Chapter Seven

    How Does Defense System Cost Growth Compare to That of Other Systems?

  • Chapter Eight

    Conclusions

  • Appendix A

    Completed Programs

  • Appendix B

    Ongoing Programs

  • Appendix C

    Statistical Analysis of DCGF

  • Appendix D

    Statistical Comparison of Military Service DCGF

Research conducted by

The research described in this report was sponsored by the United States Air Force and conducted by RAND Project AIR FORCE.

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