Management Perspectives Pertaining to Root Cause Analyses of Nunn-McCurdy Breaches, Volume 6

Management Perspectives Pertaining to Root Cause Analyses of Nunn-McCurdy Breaches, Volume 6: Contractor Motivations and Anticipating Breaches

Mark V. Arena
John Birkler
Irv Blickstein
Charles Nemfakos
Abby Doll
Jeffrey A. Drezner
Gordon T. Lee
Megan McKernan
Brian McInnis
Carter C. Price
Jerry M. Sollinger
Erin York
Copyright Date: 2014
Published by: RAND Corporation
Pages: 134
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  • Book Info
    Management Perspectives Pertaining to Root Cause Analyses of Nunn-McCurdy Breaches, Volume 6
    Book Description:

    The authors explore defense contractor motivations and identify mechanisms that might more closely align those incentives with Department of Defense goals. They also analyze major defense acquisition programs to determine if it is possible to identify programs that might incur a future Nunn-McCurdy breach by reviewing a number of acquisition programs that have incurred breaches and analyzing them for common characteristics.

    eISBN: 978-0-8330-9008-9
    Subjects: Technology, History, Political Science

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xviii)
  7. Acknowledgments
    (pp. xix-xx)
  8. Abbreviations
    (pp. xxi-xxvi)
  9. CHAPTER ONE Introduction
    (pp. 1-2)

    Congress has long been interested in reducing the cost of acquiring materiel for the Department of Defense (DoD). To that end, it directed establishment of the office of Performance Assessments and Root Cause Analysis (PARCA), with the primary purpose of providing explanations for Nunn-McCurdy breaches as part of a 60-day program review triggered when the applicable military department secretary reports a breach. The RAND National Defense Research Institute (NDRI) has been assisting PARCA with preparing these explanations. However, the director of PARCA has also asked NDRI to research various other topics related to defense acquisition.

    This report, one of a...

  10. CHAPTER TWO Contractor Incentives
    (pp. 3-44)

    Contract incentives are a key mechanism that government uses to align its objectives with the motivations of industry. Over the decades of weapon systems procurement, there have been many different views on the efficacy and appropriateness of certain contract forms and incentives. In this chapter, we provide an overview of these issues as they relate to contract incentives and draw out new areas for DoD to explore in terms of incentives. Our focus is incentives on major acquisition programs (although we briefly discuss service contracts and MAIS in the next chapter).

    This analysis is informed by a combination of a...

  11. CHAPTER THREE A Methodology for Anticipating Nunn-McCurdy Breaches
    (pp. 45-72)

    This chapter documents an exploratory analysis to develop an analytical framework that will allow anticipation of MDAP Nunn-McCurdy breaches.¹ Our intent was to develop an approach that supports PARCA’s primary missions of conducting root cause analyses and monitoring the performance of MDAPs. The framework draws on lessons learned from the root cause analyses RAND has performed, together with other readily available information, to narrow down the list of MDAPs from typically around 100 programs to a shorter, more manageable list of programs that should be monitored more closely for the possibility that they might breach Nunn-McCurdy thresholds.

    This research demonstrated...

  12. CHAPTER FOUR Concluding Observations
    (pp. 73-74)

    The chapter on contractor incentives distills observations from several individuals with extensive experience in defense acquisition. A major thrust of their deliberations is that DoD needs to develop a wider understanding of the issues—especially financial ones—that drive contractor behavior. Implicit in this recommendation is the notion that a more cooperative rather than adversarial relationship is likely to be more productive in getting the best product for the best price. This is not to say that contractors should not be subject to oversight. However, the relationship would ultimately be more productive if each party to the contract had a...

  13. APPENDIX A Membership of the COG
    (pp. 75-76)
  14. APPENDIX B Truth-Revealing Incentive Mechanisms Manages Asymmetric Information Example
    (pp. 77-80)
  15. APPENDIX C Executive Compensation
    (pp. 81-86)
  16. APPENDIX D Exploration of Multiyear Use
    (pp. 87-96)
  17. APPENDIX E Evolution of Nunn-McCurdy Legislation
    (pp. 97-102)
  18. Bibliography
    (pp. 103-108)