Research for Procurement

This study examined the trends in the Navy’s budget and prices of its platforms (ships and aircraft) to understand why the Navy cannot buy as many platforms as it used to. We found that the Navy had less to spend on procurement than before and that the Navy’s platforms cost more now than before, leading to the erosion in the buying power. The major reasons for the Navy’s having less funding available for procurement are: the overall budget is not high by historical standards; the R&D expenditure is at a historic high; and the Military Personnel and the Operations and Maintenance appropriations, while below the historic average, have not come down as much as endstrength and force size. The major reasons for the Navy’s platforms costing more than before are: the Navy is buying a richer mix of platforms, leading to higher average cost; individual platforms are more capable than their predecessors and the additional capabilities cost more; the inflation experienced by the defense manufacturers are higher than the general inflation; the Navy is buying smaller quantities of platforms causing higher unit costs; and the defense industry consolidation may have changed the price behaviors of the remaining contractors.

An Integrated Product Team (IPT) is a multi-functional team formed for the specific purpose of delivering a product or developing a process or policy. IPTs are set up to foster parallel rather than sequential decisions and to guarantee that all aspects of the product, process, or policy are considered throughout the development process. To most organizations, IPTs represent a fundamental departure from past practice, one that requires changes to structures, policies, processes, and even philosophy. Consequently, IPTs need strong high-level and middle-management support and continual reinforcement to succeed. In 1995, secretary of Defense Perry directed the use of IPTs for defense acquisition. In this paper, we examine government, industry, and academia's experience with IPTs. Based on our research, we recommend ways to better implement this new management approach.

This CNA-sponsored study identifies implications of nuclear possession between 1994 and 2003 in distant Third World areas. It identifies policies and programs affecting the design, organization, location, and employment of future U.S. forces. After exploring potential paths for the acquisition of nuclear weapons, we examined how five notional political crises (North Korea, Iran, Syria/Libya, India/Pakistan, and Algeria) evolved into nuclear confrontations. Then we analyzed what U.S. interests were relevant for each case, what political and military instruments were available, and how well they worked. Also highlighted are what the successes and failures in these cases imply for policy, strategy, and force development. We analyzed the following questions: (1) Why would some state or other party want nuclear weapons, how would it acquire them, and how fast? (2) What U.S. interests were at stake in each crisis? (3) Could nuclear use or threat of use be deterred, and how? (4) Was preemption possible, and did it make sense? (5) What kind of retaliation was feasible and justifiable? (6) How, and to what extent, did third parties participate? (7) How does the prospect of nuclear use (the nuclear shadow) affect military operations? and (8) What was the relative importance of various force components in the notional crises.

In 1991, the Department of Defense revised its instructions governing defense acquisition management. The role of Cost and Operational Effectiveness Analyses (COEAs) was spelled out at length. COEAs must be completed and presented to the acquisition decision executives at key decision milestones. For major acquisition programs, the analyses undergo extensive review within the military departments and in the Office of the Secretary of Defense. Thus, COEAs are primary--although not the only--means by which the decision authorities become informed about a program's advantages and disadvantages. Since 1991, CNA has provided leadership and staffing for a number of COEAs for the Navy and Marine Corps. Moreover, CNA has conducted COEA-like studies for various components of the Department of the Navy for many years. This paper, which draws from the collective experience of that work as well as from longer-standing principles of defense systems analysis, identifies and discusses certain issues that appear to be common to all COEAs. Each issue relates in some way to the use or misuse of cost information in the analysis. We begin with an overview of the role of COEAs in the acquisition process and a general discussion of the objectives of these studies and how they are put together. We then focus on the following issues: system versus decision alternatives; integrating cost and effectiveness results; wartime costs; discounting; risk and uncertainty analysis; and affordability.