Application of Reliability Improvement Warranty (RIW) to DoD procurements.

Abstract

The existence of a goal conflict in the buyer/seller relationship is inherent under a profit motivated system where conventional procurement techniques are used. The buyer seeks maximum performance at minimum life cycle cost and the seller seeks to maximize profit which may translate to minimizing reliability improvement costs. Experience of military and commercial procurement activities with the use of Reliability Improvement Warranties (RIW's) has led to the conclusion that the RIW may be a valuable tool in bringing buyer/ seller goals into agreement by transferring the management of costs to the seller. Background material on DoD and commercial warranty experience is used to form the framework for an evaluation criteria developed by ARINC Research Corporation to test the applicability of RIW to a particular acquisition. The limited DoD guidance which has been promulgated is recapitulated for consolidation with the ARINC criteria and recent experience.