An Overview of Acquisition Reform Cost Savings Estimates by Mark Lorell

By Mark Lorell

A couple of analyses have lately been carried out in efforts to replace technical price types and value estimating relationships for fixed-wing wrestle plane, particulary in mild of the various cost-saving measures which have been initiated during the last decade. This record specializes in aqguisition reform or the establishment of alterations in executive acquisition procrsses or within the dating among the govt. and division of safeguard primes.

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None of these firms had systematically collected actual data to support AR savings claims. Firms singled out TINA as the most onerous regulatory burden listed in the C&L top ten. Other C&L cost drivers often mentioned included C/SCS, MMAS, CAS, and MIL-Q-9858A and 1520 (corrective action procedures). The main negative cost effect of TINA, according to many industry representatives, is in the area of proposal preparation and implementation. Managers claimed that TINA-compliant pro- DoD Regulatory and Oversight Compliance Cost Premium 27 posals require much more paperwork, fact-finding documentation, audits, and background information than non-TINA proposals.

The basic concept of CAIV is that it raises rigorous production-unit cost goals to the same priority level as performance and other key system goals during the design and development phases of a weapon system. As such, it is similar to the “must cost” goals that commercial aircraft transport developers and other commercial firms impose on their designers, engineers, and subcontractors when they initiate the development of a new system. More is said on the CAIV concept in subsequent sections of this report.

In addition, C&L applied a methodology based on “activity-based costing” (ABC) and examined only the portion of the contract cost that was value-added by the contractors under investigation. 6 C&L’s findings, reported to the DoD in December 1994, proved to be a highly influential and often-cited document. , the first to be based on a detailed assessment of an extensive and sys______________ 5 These sites were Allison Transmission (a subsidiary of General Motors), Beech Aircraft (a division of Raytheon), Boeing Defense and Space Group, Rockwell Collins Avionics and Communications Division, Hughes Space and Communications Company (a subsidiary of General Motors), Motorola Government Systems Technology Group, Oshkosh Truck-Chassis Division, the Timken Company, Teledyne Ryan TCAE Turbine Engines, and Texas Instruments Defense Systems and Electronics Group.

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