Analysis of Aircraft Weapon Systems Cost Growth and Implementation of Acquisition Reform Initiatives Using a Hybrid Adjusted Cost Growth Model

This thesis examined cost growth in Department of Defense (DoD) aircraft weapon systems from 1991 to 2001 using Selected Acquisition Report (SAR) data with a hybrid adjusted cost growth (ACG) model. In addition, an analysis of acquisition reform initiatives during the treatment period was conducted to determine if reform efforts impacted aircraft weapon system cost growth. A "pre-reform" (1 January 1991 to 31 December 1996) period and "post reform" (1 January 1997 to 31 December 2001) period was subjectively developed to compare the mean annual ACG during each period for statistical differences. The hybrid ACG model outlined in this thesis may aid program managers and other interested parties in determining weapon systems cost growth, and the conclusion drawn from analyzing current acquisition initiatives may assist DoD leadership in assessing reform effectiveness on reducing cost growth. This research effort analyzed 78 SARs for 13 aircraft weapon systems that reported a Milestone II baseline during the treatment period. ACG calculations revealed that aircraft systems from 1 January 1991 to 31 December 2001 averaged 40 percent cost growth annually. The acquisition reform analysis included 43 SARs from 11 programs during the pre-reform period and 35 SARs from 7 programs in the post-reform period. A small sample t-test was used to compare the annual means of the two periods and revealed that at a .05 significance level no significant difference existed between the annual average ACG for the pre-reform and post reform periods. The thesis methodology, results, and suggestions for future research are provided.