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Research Questions

  1. Are the key characteristics identified in the programs with extreme cost growth present in the programs with low cost growth, and why?
  2. What are the common characteristics of the low cost-growth programs and can such characteristics be incorporated in future Air Force Major Acquisition Programs?
  3. Are the recommendations from the earlier RAND Corporation report still valid and broadly applicable to future Air Force Major Acquisition Programs?

This report is a companion report to an earlier report, which identified the main characteristics of six recent U.S. Air Force acquisition programs with extreme cost growth. This report evaluates four recent Air Force Major Defense Acquisition Programs (MDAPs) with low cost growth and compares and contrasts their key characteristics to the six programs evaluated with extreme cost growth from the earlier report.

The purpose is threefold. First, we seek to determine whether or not the key characteristics identified in the programs with extreme cost growth are present in the programs with low cost growth and, if not, why. If those characteristics are not present, we assume that this finding reinforces our view that the key characteristics of the extreme cost-growth programs that were identified are likely the root causes of extreme cost growth. Second, we seek to determine the common characteristics of the low cost-growth programs and whether such characteristics can be incorporated into future Air Force MDAPs. Finally, we revisit the main recommendations from our earlier report regarding approaches to mitigating extreme cost growth and, based on our findings from the low cost-growth programs, determine whether those recommendations are still valid and broadly applicable to future Air Force MDAPs.

This report provides summary case studies of the four MDAPs with low cost growth, how the key characteristics of these programs compare with the six programs with extreme cost growth, and how these findings affect our earlier recommendations on mitigating the causes of extreme cost growth.

Key Findings

Key Characteristics Identified on the Programs with Extreme Cost Growth Are Important Causes of Extreme Cost Growth and Cost Growth in General

  • With the possible exception of the Wideband Global SATCOM All Blocks, the low cost-growth programs exhibit few of the key characteristics of the six extreme cost-growth programs.
  • The assessment of four Major Defense Acquisition Programs (MDAPs) with low cost growth and comparison with the six MDAPs with extreme cost growth indicate that there appears to be a strong relationship between the program attributes identified in our prior research and extreme cost growth.

There Is a Pronounced Difference Between the Programs with Extreme Cost Growth and Those with Low Cost Growth When Examining Estimated Research, Development, Test, and Evaluation Costs for All Ten Programs at Milestone B

  • All of the programs with low cost growth have smaller research, development, test, and evaluation estimates at Milestone B, with the exception of the C-5 Reliability Enhancement and Re-Enginging Program.
  • Our case-study analysis confirms that the six extreme cost-growth programs tended to be much larger, more complex, and challenging development (as well as production) programs than the four programs with low cost growth.
  • This finding does not mean that the lessons learned from the low cost-growth programs are only truly applicable to similar types of lower complexity programs.

Recommendations

  • As in the earlier RAND report, we recommend mitigating extreme cost growth by ensuring that programs have realistic cost estimates at Milestone B.
  • We also embrace incremental strategies with comprehensive and proven implementation strategies.
  • When possible, large, complex programs incorporating cutting-edge technologies and challenging system-integration issues should probably be separated into smaller, less-complex subcomponents, unless urgent requirements or the technological and design configuration of the system make such an approach unfeasible.
  • Effective implementation of incremental acquisition strategies can be challenging, particularly in determining the precise content of each increment, but this approach appears to hold out the promise of reducing developmental and integration complexities and risks that may lead to substantial cost growth later in programs.
  • The Air Force needs to continue to experiment with incremental strategies, as well as novel contracting methods and incentives and other approaches to encourage contractors to control cost growth.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Case Studies

  • Chapter Three

    Comparing Attributes of Low and Extreme Cost-Growth Programs

Research conducted by

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

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