Valuation of capabilities and system architectural options to meet affordability requirement
Abstract
This research addresses the problem of how to (1) value architectural options
that deliver capabilities to the warfighter not inherently measured in dollar values and
(2) conduct a trade study of architectural options, the option’s cost, and the option’s
risk to support the affordability mandate for a more effective and efficient acquisition
decision-making process. The research models acquisition as a sequential decision
process with an options framework but with two significant distinctions: First, it
identifies and values system architectural options available in the system design,
and not options on the project, and second, it measures capabilities in terms of
mission effectiveness compatible with how defense managers think. Architectural
options provide flexibility to deal with technical and operational uncertainty. The
research contributes to the performance of trade studies in acquisition through the
definition of architectural options in terms consistent with defense acquisition
(capabilities and not cash flows) and a theory for how program managers can value
the capabilities those options provide. The research is intended to support the
evolutionary acquisition of system capabilities. As RADM Rowden (2014), the
director of Surface Warfare stated, We cannot afford to build ships that are retired because they have
been outpaced by the threat; rather, they will need to be retired
because they have reached the end of their service life. Defined
interfaces and modular designs will treat capability as a commodity,
enabling continuous modernization to stay one step ahead of the
threat. These “designed-in” features will dramatically lower the
complexity of modernizing ships, reducing the time spent in overhauls,
increasing operational availability, and reducing total ownership cost. This research addresses the problem of how to (1) value architectural options
that deliver capabilities to the warfighter not inherently measured in dollar values and
(2) conduct a trade study of architectural options, the option’s cost, and the option’s
risk to support the affordability mandate for a more effective and efficient acquisition
decision-making process. The research models acquisition as a sequential decision
process with an options framework but with two significant distinctions: First, it
identifies and values system architectural options available in the system design,
and not options on the project, and second, it measures capabilities in terms of
mission effectiveness compatible with how defense managers think. Architectural
options provide flexibility to deal with technical and operational uncertainty. The
research contributes to the performance of trade studies in acquisition through the
definition of architectural options in terms consistent with defense acquisition
(capabilities and not cash flows) and a theory for how program managers can value
the capabilities those options provide. The research is intended to support the
evolutionary acquisition of system capabilities. As RADM Rowden (2014), the
director of Surface Warfare stated, We cannot afford to build ships that are retired because they have
been outpaced by the threat; rather, they will need to be retired
because they have reached the end of their service life. Defined
interfaces and modular designs will treat capability as a commodity,
enabling continuous modernization to stay one step ahead of the
threat. These “designed-in” features will dramatically lower the
complexity of modernizing ships, reducing the time spent in overhauls,
increasing operational availability, and reducing total ownership cost.
Description
Disclaimer: The views represented in this report are those of the author and do not reflect the official policy
position of the Navy, the Department of Defense, or the federal government.
Sponsored Report (for Acquisition Research Program)
Disclaimer: The views represented in this report are those of the author and do not reflect the official policy
position of the Navy, the Department of Defense, or the federal government.
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-14-015NPS-AM-14-015
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