An Overview of Acquisition Reform Cost Savings Estimates by Mark Lorell

By Mark Lorell

A couple of analyses have lately been performed in efforts to replace technical rate versions and value estimating relationships for fixed-wing wrestle airplane, particulary in gentle of the various cost-saving measures which were initiated over the last decade. This record specializes in aqguisition reform or the establishment of adjustments in govt acquisition procrsses or within the courting among the govt and division of safeguard primes.

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GAO also evaluated and compared SAR data from 1993 and 1995 for 33 weapon programs that accounted for more than 60 percent of the reported AR savings, and it found that more than two-thirds of these programs actually experienced cost growth after adjustments were made for inflation and quantity changes. The average for all 33 programs was a cost growth of 2 percent. 20 It is important to emphasize, however, that GAO did not dispute the claim that AR produces real cost savings. Rather, it argued that those savings were (1) overstated by the services, and (2) often offset by other factors, resulting in no reduction in overall program costs.

The average cost premium was derived by applying a weighting to the results from each of the six firms based on total sales revenue and total DoD business. 8 The ten sites were at Boeing, Seattle, Washington; Northrop Grumman, Hawthorne, California; Hughes Missile Systems, Tucson, Arizona; Lockheed Martin, Fort Worth, Texas; Loral Vought, Grand Prairie, Texas; Texas Instruments, Dallas, Texas; McDonnell Douglas, St. Louis, Missouri; Magnavox, Fort Wayne, Indiana; Lockheed Martin, Moorestown, New Jersey; and Raytheon, Bedford, Massachusetts.

Technology and process improvements in military avionics development and manufacturing, especially as they relate to the Joint Strike Fighter (JSF);4 and 5. Technology and process improvements in military aircraft engines (research in progress). This document reports the results of the research conducted in the second area listed above: acquisition reform (AR). Its purpose is to determine whether published estimates in the literature are sufficiently robust to contribute to the development of adjustment factors for use in predictive cost models that reflect the effects of AR on the costs of developing and producing fixed-wing combat aircraft.

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