The Economic Evaluation of Alternatives (EEoA): Rethinking the Application of Cost-effectiveness Analysis, Multi-criteria Decision-making (MCDM) and the Analysis of Alternatives (AoA) in Defense Procurement
Abstract
Our primary goal is to improve public investment decisions by providing defense analysts and acquisition officials a comprehensive set of approaches to structure an ''Economic Evaluation of Alternatives'' (EEoA). This study identifies a significant weakness in the Multi-criteria Decision-making (MCDM) approach that currently underpins many contemporary AoAs. While MCDM techniques, and therefore most AoAs, correctly focus on lifecycle costs and operational effectiveness of alternatives, ''Affordability'' is often only implicitly addressed in the final stages of the analysis. In contrast, the adoption of EEoA encourages decision-makers to include affordability explicitly and up-front in the AoA. This requires working with vendors to build alternatives based on different funding (budget/affordability) scenarios. The key difference between the traditional MCDM approach to AoAs and the EEoA approach is that instead of modeling alternatives from competing vendors as points in cost-effectiveness space, EEoA models alternatives as functions of optimistic, pessimistic, and most likely funding (budget) scenarios. The Decision Map offered to practitioners to structure EEoAs provides a unique opportunity to achieve a significant defense acquisition reform''to coordinate the requirements generation system (JCIDS), Defense Acquisition System (DAS), and PPBE process, to lower the costs of defense investments, and improve performance and schedules.
Description
Proceedings Paper (for Acquisition Research Program)
Rights
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.NPS Report Number
NPS-AM-09-012Related items
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The economic evaluation of alternatives
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The Economic Evaluation of Alternatives
Melese, Francois (Monterey, California: Naval Postgraduate School., 2010-02-08); NPS-GSBPP-10-002This study offers a comprehensive set of approaches for procurement officials to structure public investment decisions. Designed to improve acquisition outcomes, the “Economic Evaluation of Alternatives” (EEoA) addresses ... -
The Economic Evaluation of Alternatives
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