Controlling costs in Major Defense Acquisition Programs is essential to the overall affordability of Air Force modernization plans. A handful of ongoing and recently terminated programs account for substantially higher cost growth in recent Air Force programs compared with complete programs. Cost growth to date in four continuing large-dollar programs must be contained to ensure affordability of the Air Force's long-term investment plans.

Cover: Air Force Major Defense Acquisition Program Cost Growth Is Driven by Three Space Programs and the F-35A
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Air Force Major Defense Acquisition Program Cost Growth Is Driven by Three Space Programs and the F-35A

Fiscal Year 2013 President's Budget Selected Acquisition Reports

by Robert S. Leonard, Akilah Wallace

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Research Questions

  1. How much cost growth is there in the Air Force's Major Defense Acquisition Programs? Are current programs experiencing more cost growth than historical programs? If so, is it all or just some that are experiencing problematic cost growth?
  2. What Major Defense Acquisition Programs will require the largest annual acquisition funding authorizations over the next two decades? These are the programs where cost growth must be constrained to ensure the affordability of the entire Air Force weapon system portfolio.

During the past four decades, the military services and the Office of the Secretary of Defense (OSD) have managed hundreds of very large weapon system acquisition programs. These programs, designated Major Defense Acquisition Programs (MDAPs), account for more than 40 percent of weapon-system acquisition funding appropriated by Congress. RAND maintains an internal database of costs and schedules for these programs, as reported in Selected Acquisition Reports (SARs) dating back to the 1960s.

In this report, researchers analyze cost growth in Air Force–managed MDAPs. Differing definitions of cost growth provide differing insights into program outcomes. The analysis focuses on those MDAPs that contain the highest levels of development activity and that, at a minimum, have proceeded through the acquisition process to a point at which a portion of the production units envisioned at the program's Milestone (MS) B were produced and delivered to the warfighter. These MDAPs are broken into two groups: continuing and complete.

Controlling costs in continuing MDAPs is essential to the overall affordability of Air Force modernization plans. A handful of ongoing and recently terminated programs account for substantially higher cost growth in recent Air Force programs compared with complete programs. Cost growth to date in four continuing large-dollar programs must be contained to ensure affordability of the Air Force's long-term investment plans.

Key Findings

Continuing Major Defense Acquisition Programs (MDAPs) Have Higher Average Cost Growth than Those That Are Complete

  • Average cost growth in all acquisition metrics except development is substantially higher in continuing Air Force MDAPs than those that are now complete.
  • Three continuing space programs with extreme cost growth — Space-Based Infrared System, High Component; Advanced Extremely High Frequency; and Evolved Expendable Launch Vehicle (EELV) — drive the higher cost growth in the group of continuing MDAPs. However, in dollar terms, cost growth in the Air Force portion of the F-35 program (F-35A) is by far the largest of all programs.
  • Thus far, there is minimal cost growth in MDAPs begun in the past ten years that have substantial Air Force funding.
  • Four MDAPs in aggregate are expected to consume a large fraction of annual Air Force MDAP acquisition funding in the coming 20 years: F-35A, EELV, KC-46A, and the Long-Range Strike Bomber.

Recommendation

  • Four programs in aggregate are expected to consume a large fraction of annual Air Force weapon system investment funding in the coming 20 years: F-35A, EELV, KC-46A, and the Long Long-Range Strike Bomber. The first two are well along in the acquisition process but have decades of production to come. Opportunity remains to stem the cost growth in these programs. The second two are earlier in the acquisition process and thus provide even greater opportunities to ensure affordability and minimal future cost growth. Controlling the cost of these four high-value programs is essential to ensuring both their affordability and that of the entire Air Force weapon system acquisition portfolio for decades to come.

Table of Contents

  • Chapter One

    Selected Acquisition Report Data and Analytics

  • Chapter Two

    Analysis of Major Defense Acquisition Programs with Substantial Air Force Funding

  • Chapter Three

    Findings for Major Defense Acquisition Programs with Substantial Air Force Funding

Research conducted by

The research reported here was commissioned by the Deputy Assistant Secretary for Acquisition Integration, Office of the Assistant Secretary of the Air Force for Acquisition, Headquarters U.S. Air Force, and conducted within the Resource Management Program of RAND Project AIR FORCE.

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