Value-Based Assessment of DoD Acquisitions Programs

AbstractLarge-scale programs developed by government entities have a reputation for both costing more and delivering less than was originally intended. In recognition of that, the Government Accountability Office (GAO) began in 2003 to develop and present to Congress a series of status reports and cost audits of selected large acquisitions programs, including data showing changes in projected cost, the development schedule, and the number of units to be acquired. This data represents a publicly-available source of information on how the value of government programs can change over time; a preliminary model was developed for this study that uses GAO data to assess that change in value. Current findings using this technique are expressed in terms of projected program-end net present value (NPV), percentage change in NPV, and an aggregate daily estimated change in NPV over all programs. All results reveal a skew towards loss in value; less than 20% of programs in the set show a positive projected net present value, but those programs comprise less than 2% of the aggregate NPV. When scaled to the FY2012 acquisitions budget, the aggregate daily loss over DoD programs is approximately $208 million. Work to improve and extend these findings using more detailed public-domain data is ongoing at the University of Alabama in Huntsville