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 expense types and value estimating relationships for fixed-wing strive against plane, particulary in mild of the varied cost-saving measures which were initiated during the last decade. This document specializes in aqguisition reform or the establishment of alterations in executive acquisition procrsses or within the courting among the govt and division of safeguard primes.

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An Overview of Acquisition Reform Cost Savings Estimates

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Many barriers still exist to implementing the recommendations of the C&L report and other similar studies. • Some field-level government officials are resisting full implementation of regulatory and oversight reform measures. • Most SPI savings are really future cost avoidance. SPI savings due to regulatory relief are difficult to identify and quantify. • The initial estimates of overall AR savings made in the 1995–1997 time frame are difficult to verify and are probably not very reliable. Most contractors estimated that the potential savings from reform of C&L’s top ten cost drivers are on the order of 4 to 6 percent, although some firms place the potential figure as high as 15 percent.

2 Obaid Younossi, Michael Kennedy, and John C. Graser, Military Airframe Costs: The Effects of Advanced Materials and Manufacturing Processes, Santa Monica: RAND, MR1370-AF, 2001. 1 2 An Overview of Acquisition Reform Cost Savings Estimates 3. Lean implementation and other initiatives oriented primarily toward processes within a prime airframe manufacturer or relationships between these primes and their suppliers;3 4. Technology and process improvements in military avionics development and manufacturing, especially as they relate to the Joint Strike Fighter (JSF);4 and 5.

The first study originated when OUSD (A&T) requested that RAND assist OSD in analyzing the service data. Specifically, OSD asked RAND to help standardize the data and conduct a preliminary analysis. Toward this goal, RAND assessed 70 MDAPs using Selected Acquisition Report (SAR) data. The RAND study concluded that the total estimated savings amounted to $22 billion but that the bulk of the reported cost reductions represented future cost avoidance expected in FY02 and beyond. 5 percent of total program budgets.

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