Addressing Cost Increases in Evolutionary Acquisition

Report Number: NPS-AM-10-029

Series: Acquisition Management

Category: Cost Management

Report Series: Proceedings Paper

Authors: Douglas A. Bodner, Farhana Rahman, Bill Rouse

Title: Addressing Cost Increases in Evolutionary Acquisition

Published: 2010-04-01

Sponsored By: Acquisition Research Program

Status: Published--Unlimited Distribution

Research Type: Other Research Faculty

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Keywords: Cost Management


Acquisition programs are under pressure to deliver increasingly complex capability to the field without the cost growth associated with recent programs. Evolutionary acquisition was adopted to help reduce system cost (through the use of mature technologies) and to improve system performance (through faster deployment of incremental capability). While the ultimate verdict is not yet in on this decision, our previous simulation-based results have demonstrated that evolutionary acquisition can deliver improved capability more quickly than traditional acquisition, but that cost may actually increase over that of traditional acquisition. This is due to the overhead resulting from more frequent system deployment and update cycles. Are there other factors that can help reduce the cost of evolutionary acquisition? This paper investigates the role of system modularity and production level in the cost of evolutionary acquisition. Modularity typically imposes upfront costs in design and development, but may result in downstream savings in production and sustainment (including deployment of evolutionary new capability). A simulation experiment is conducted to determine under which conditions cost increases are minimized.