An analysis of cost overruns in the development of the Navy's A-12 Avenger aircraft [electronic resource]

Abstract

This thesis examines the termination of the Navy's A-12 Program. Specifically, the research sought to answer the question: Were the A-12 Program's cost overruns exceptional when compared to other major acquisitions. Prior research indicates that most major programs experience some degree of cost variance. To determine if the A-12's overruns were exceptional, the A-12 Program and 58 other contracts for developmental work are compared. The conclusion of the research is the A-12's overruns were exceptional. The cost overruns in the A-12 Program, at termination, exceeded 97 percent of other programs examined. To complete the Program may have cost between $9 and $11 billion. The required budget adjustment to complete the A-12 Program was greater than 91 percent of other programs. The research found no difference between cost variances of fixed-price contracts and cost-type contracts. The assertion that the use of a fixed-price contract contributed to the failure of the Program was not proven. There was also no statistical difference between the cost overruns of aircraft programs and other types of programs. The Government's decision to terminate the A-12 Program for cost overruns is justified, based on the sample of programs examined.