Application of Transaction Cost Economics to Capabilities-based Acquisition: Exploring Single Service vs. Joint Service Programs and Single Systems vs. System-of-Systems

Proceedings Paper (for Acquisition Research Program)The US Department of Defense (DoD) is in the process of radical transformation'' to a national security strategy predicated on joint Service purchases and complex System-of-Systems (SoS) capabilities. This paper contributes to a broader study that eventually needs to be conducted to evaluate the benefits and costs of increased reliance on joint Service SoS programs.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Gap Analysis: application to earned value analysis

Acquisition research (Graduate School of Business & Public Policy)Earned Value is regarded as a useful tool to monitor commercial and defense system acquisitions. This paper applies the theoretical foundations and systematics of Gap Analysis to improve Earned Value Management. As currently implemented, Earned Value inaccurately provides a higher value for the work performed. This preliminary research indicates that Earned Value calculations can be corrected. Value Analysis, properly defined and enacted, clarifies management strategies to facilitate appropriate investment decisions.Approved for public release; distribution is unlimited

Gap Analysis: Application to Earned Value Analysis

Sponsored Report (for Acquisition Research Program)Earned Value is regarded as a useful tool to monitor commercial and defense system acquisitions. This paper applies the theoretical foundations and systematics of Gap Analysis to improve Earned Value Management. As currently implemented, Earned Value inaccurately provides a higher value for the work performed. This preliminary research indicates that Earned Value calculations can be corrected. Value Analysis, properly defined and enacted, clarifies management strategies to facilitate appropriate investment decisions.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Business Case Analysis and Contractor vs. Organic Support: A First-Principles View / September 2004

The Business Case Analysis (BCA) is regarded as a highly-useful management tool. BCAs are mandatory, among other things, for formulating Product Support Strategies (PSSs) in the development of major systems. While defense managers appear to have sufficient guidance regarding BCA documentation, a comparable level of guidance regarding analytical methods is not evident. In fact, there is extant OSD guidance which leaves analytical methods as a task for the services. Accordingly, this essay addresses theoretical foundations useful for BCAs, and practical foundations for analysis in the defense arena—with special attention to the choice of contractor vs. organic support in the formulation of Product Support Strategies (PSSs). The report concludes with a proposed partnership involving the Navy with the defense academic and analytical communities. It also offers words of advice based on current state-of-the-art for Program Managers doing BCAs assessing contractor vs. organic support.Prepared for: Naval Sea Systems Command and Naval Postgraduate School, Monterey, California 9394

Business Case Analysis and Contractor vs. Organizational Support: A First-Principles View

Sponsored Report (for Acquisition Research Program)The Business Case Analysis (BCA) is regarded as a highly-useful management tool. BCAs are mandatory, among other things, for formulating Product Support Strategies (PSSs) in the development of major systems. While defense managers appear to have sufficient guidance regarding BCA documentation, a comparable level of guidance regarding analytical methods is not evident. In fact, there is extant OSD guidance which leaves analytical methods as a task for the services. Accordingly, this essay addresses theoretical foundations useful for BCAs, and practical foundations for analysis in the defense arena''with special attention to the choice of contractor vs. organic support in the formulation of Product Support Strategies (PSSs). The report concludes with a proposed partnership involving the Navy with the defense academic and analytical communities. It also offers words of advice based on current state-of-the-art for Program Managers doing BCAs assessing contractor vs. organic support.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Summary of: New Patterns of Collaboration and Rivalry in the US and European Defense and Aerospace Industries

Proceedings Paper (for Acquisition Research Program)International defense industrial affairs are becoming increasing global and increasingly complex. This report is a continuation of the authors'' efforts to provide insights and analytical frameworks useful for understanding ongoing developments in the global defense market. In this stage of that overall project, we focus primarily on defense industrial firms and their relationships with their sovereign customers''considering the organization of Boeing 787 development and production, the KC-45 aerial tanker competition, and European defense firms'' direct investment in the US defense market.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

A Transactions Cost Economics Approach to Defense Acquisition Management

Sponsored Report (for Acquisition Research Program)This study examines defense acquisition through the new lens of Transaction Cost Economics (TCE). TCE is an emergent field in economics that has multiple applications to defense acquisition practices. TCE''s original focus was to guide ''make-or-buy?'' decisions that define the boundaries of a firm. This study reviews insights afforded by TCE that impact government outsourcing (''buy'' decisions), paying special attention to defense procurement. The study offers a brief synthesis and review of current Defense acquisition practices. The Department of Defense (DoD) is a unique enterprise that relies heavily on outsourcing. Outsourcing transactions are governed using a wide variety of contracts that share risk between the government and the contractor. Cost, schedule, and technical performance are widely accepted as success parameters in public and private transactions. While recently enacted defense acquisition practices address many of the issues raised by TCE, a key concept called ''asset specificity'' seems to have been overlooked. The ''lock-in'' effect achieved by contractors that invest in specific assets, while benefiting the government in the short run, can haunt the government in the long run. The risk is that, after winning a bidding competition, a contractor that invests in specific assets might eventually become a sole supplier that ''holds up'' the government, resulting in higher costs, schedule delays, or disappointing performance. We discuss some new and old solutions to the ''holdup'' problem. We conclude by offering a number of insights for defense acquisition program managers generated by the new perspective of TCE. Whereas there is no universal template for the management and governance of complex and uncertain defense outsourcing relationships, TCE offers a valuable new perspective to improve the design and management of those relationships.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Summary of Echoes Across the Pond: Understanding EU-US Defense Industrial Relationships

Proceedings Paper (for Acquisition Research Program)This report represents the authors'' efforts to provide a useful, albeit partial, understanding of the international defense marketplace''which we view as growing increasingly complex. In pursuit of that objective, we provide a brief overview of international defense markets in the context of both changes in military affairs and the various defense industrial bases. In analyzing the defense market, we essay multiple analytical frameworks (along the lines of Essence of Decision). Our analytical models are: (a) a sophisticated view of offsets in a public policy context with market imperfections, (b) transaction cost economics, with our unit of analysis being the nation-state instead of the firm, and (c) two standard corporate strategy models. To test the models'' explanatory powers, we consider three ongoing ''cases'': F-35 Joint Strike Fighter, the UK Defense Industrial Strategy, and the Northrop-Grumman-EADS KC-30 proposal. Interestingly, we find all three hypotheses have some explanatory power, but none of the three is demonstrably better than the others (in this small sample).Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Gap Analysis: Rethinking the Conceptual Foundations (report)

Proceedings Paper (for Acquisition Research Program)Gap Analysis is widely regarded as a useful tool to facilitate commercial and defense system acquisitions. This paper is a rethinking of the theoretical foundations and systematics of Gap Analysis with practical extensions to illustrate its utility and limitations. It also provides a new perspective on those theoretical foundations from the perspectives of systems and value engineering. The growing sophistication and complexity of new systems or system-of-systems have resulted in a dramatic increase in time and money to reach operational capability. Gap Analysis, properly defined and enacted, clarifies goals, appropriate investment and the end-use.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Making Time From Data: Toward Realistic Acquisition Schedule Estimates

Naval Postgraduate School Acquisition Research Progra