Analysis of Pricing Models in the Defense Industry to Support Cost Projections
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Authors
Lin, Kyle
Singham, Dashi
Subjects
Advisors
Date of Issue
2015
Date
10/1/2014 to 9/30/2015
Publisher
Monterey, CA; Naval Postgraduate School
Language
Abstract
Because developing a new weapon system involves advanced technology pertinent to national security, the pricing of such systems primarily relies on cost estimation, as opposed to basic economic principles such as supply and demand. During the R&D period—which can take up to several years—however, the research may hit a roadblock and the various costs may change. As a consequence, such projects are often subject to substantial delays and cost overrun. This project will develop a mathematical model for the interaction among stakeholders in the defense industry, including the government and major defense contractors. The goal is to identify market mechanism to improve the efficiency of the contracting process. These mechanisms could improve the cost estimation process or contracting structure to better manage risk.
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Report
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Naval Research Program
Prepared for: N9 Sponsor, POC: Mr. Chris Marsh
Prepared for: N9 Sponsor, POC: Mr. Chris Marsh
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This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.