Publication:
Cost and Time Overruns for Major Defense Acquisition Programs: An Annotated Brief

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Authors
Berteau, David
Ben-Ari, Guy
Hofbauer, Joachim
Sanders, Gregory
Ellman, Jesse
Morrow, David
Subjects
Major Defense Acquisition Programs (MDAPs)
MDAPs, Cost Overruns, Time Overruns, Inaccurate Cost Estimates, Fixed Price Contracts, Program Performance
Advisors
Date of Issue
2011-04-30
Date
30-Apr-11
Publisher
Monterey, California. Naval Postgraduate School
Language
Abstract
Cost and time overruns in Major Defense Acquisition Programs (MDAPs) have become a high-profile problem attracting the interest of Congress, government, and watchdog groups. According to the GAO, the 98 MDAPs from FY2010 collectively ran $402 billion over budget and were an average of 22 months behind schedule since their first full estimate. President Obama''s memorandum on government contracting of 4 March 2009 also highlighted this issue. This paper presents findings of research on the root causes of cost and schedule delays for 92 MDAPs active in 2010 and 12 cancelled programs. The results do not establish causality but they do indicate multiple notable correlations. Inaccurate cost estimates are responsible for the strongest correlation with net cost growth changes and are associated with 40% of the accumulated cost overruns. In addition, the start year has little impact on the compound annual growth rate of cost overruns. This suggests that relatively better performance of newer programs may prove illusionary as programs age. Finally, fixed price contracts appear to have relatively smaller overruns, although this may tell us more about which programs are likely to receive fixed price contracts rather than what effect fixed price contracts may have on program performance.
Type
Technical Report
Description
Proceedings Paper (for Acquisition Research Program)
Department
Acquisition Management
Other Research Faculty
Identifiers
NPS Report Number
NPS-AM-11-C8P14R02-053
Sponsors
Naval Postgraduate School Acquisition Research Program
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
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.