Maturing Cost Estimation in a Rapid Acquisition Environment

Abstract

The Department of Defense (DoD) acquisition community is increasingly pursuing means to introduce new capabilities to the warfighter as quickly as possible. When facing emerging threats, the warfighter cannot wait for a new, critical capability to work its way through the rigid and time-consuming traditional acquisition process. In an era of tightening federal budgets and increased demand for new technology to help meet mission requirements, agencies are searching for ways to deliver critical mission functionality faster and with less risk. The traditional acquisition planning process, with its numerous maturity milestones and decision gates, was designed to reduce risk and field a mature, sustainable capability, and is not suitable for obtaining smaller, innovative technologies that may have shortened technology life cycles, or for helping users counter emerging threats. The DoD is challenged to quickly address urgent operational needs (UONs) that could endanger military personnel or lead to mission failure (Wizner, 2013). During the Global War on Terror (GWOT), the Secretary of Defense (SECDEF) promoted and implemented a decision process to shorten existing budget planning and procurement cycles, to create rapid acquisition methods to equip the warfighter, and to fulfill UONs. However, this process was implemented in an ad hoc manner across the Services. Critical review of these rapid methods provided insights regarding shortfalls of a shortened process, and revealed a need to mature and formalize a rapid process. Circumventing the traditional acquisition process to field capability more quickly affects requirements, cost, and affordability planning. Therefore, the DoD is challenged to generate confident and credible cost estimates where programs may have less definition and/or greater uncertainty in a rapid acquisition environment. The military sector strives "to be an innovation leader in developing technology to protect troops on and off the battlefield"(DoD, 2017). When utilizing rapid methods, the DoD must ensure that it understands the total costs of a capability to make informed decisions about the capability and systems being acquired. To make effective decisions, it is essential to establish a repeatable process and assess initial costs, as well as the potential enduring impact on costs, as solutions move from rapid processes into traditional Programs of Record (PoRs). Cost estimating plays a critical role in a rapid decision-making process by providing decision makers a deeper understanding of cost implications in rapid acquisition environments. Embedded in the traditional capability planning process are well-documented and recognized best practices for developing credible cost estimates to support DoD decision planning. However, new rapid acquisition approaches, with their short timelines, challenge the cost-estimation community. Therefore, the cost community needs to understand and mature estimation techniques to adapt and operate effectively when using rapid acquisition approaches. The DoD needs to be able to deliver accurate and credible cost estimates on rapid acquisitions to make better informed decisions. This research provides the acquisition, cost, programmatic, and system engineering communities a deeper understanding of the impacts on cost estimating processes and cost approaches. This will help the DoD understand key areas where cost estimation should be adapted, and areas where there is increased uncertainty. This research focuses on all aspects of rapid acquisition to help program offices develop credible and confident cost estimates needed to make informed, data-driven decisions. This research will generate key insights that programs need to fully understand both near-term and long-term cost challenges of a rapid acquisition process compared with capabilities developed and acquired using traditional acquisition procedures. Results of this research on maturing cost methods in a rapid acquisition environment will improve the ability of program offices to estimate the cost of implementing rapid capability in a consistent and repeatable way. Understanding the impact that a rapid acquisition process has on generating credible cost estimates helps to prove this research proposition and deliver outcomes that are impactful for programs and the defense acquisition community. This research will impact programs by improving the ability to make informed, data-driven decisions in a rapid acquisition environment. It will also benefit the DoD, Joint, and Services' portfolios at an enterprise level, where the research will help cost communities and program leadership assess and evaluate cost implications of capabilities acquired when using rapid acquisition methods.