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Research Questions

  1. Do Cost Adjustment Sheets (CASs) contribute to the accuracy of Navy's Flying Hour Program budgets?
  2. Is CAS usage is correlated with expenditure-per-flying-hour growth?
  3. Why have CASs have been used more by the F/A-18 program?

In recent years, most Cost Adjustment Sheets (CASs) have increased the Navy's Flying Hour Program (FHP) budget. They also have been far more utilized by the F/A-18 program than by program offices for most other types of naval aircraft. RAND assessed the contribution of CASs to the accuracy of FHP budgets and whether CAS usage is correlated with expenditure-per-flying-hour growth, concluding that CASs appear to increase the accuracy of aggregate FHP budgets, and their use (or lack of same) are not of pre-eminent importance in identifying problematic Type Model Series. The extensive F/A-18 usage of CASs seems to be driven by factors intrinsic to that weapon system along with the program evolving to a norm of using CASs while managers of other Navy aircraft either build changes into baseline budgets or ignore them altogether. Using the metric of expenditure-per-flying-hour growth, the F/A-18 does not stand out either favorably or unfavorably.

Key Findings

Cost Adjustment Sheets, While Helpful, Are Not Indicative of Problematic Type Model Series

  • Observed rates of growth of F/A-18 expenditures per flying hour are not unusual compared with other Navy and Air Force aircraft.
  • The MH-53E has had considerable expenditure-per-flying-hour growth, but has only used CASs modestly.

Recommendation

  • The Navy should not infer that a Type Model Series has unusual cost growth solely because it uses the CAS process extensively. Likewise, a lack of CAS usage does not necessarily imply that a Type Model Series does not have cost growth.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    An Analysis of Cost Adjustment Sheets

  • Chapter Three

    Differences Between Budgets and Expenditures

  • Chapter Four

    Expenditures-per-Flying-Hour Growth by T/M/S

  • Chapter Five

    Conclusions

The research described in this report was prepared for the United States Navy. The research was conducted within 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 Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

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