ARJ 66

From the Chairman and Executive Editor

Digging Out the Root Cause: Nunn-McCurdy Breaches in Major Defense Acquisition Programs

Irv Blickstein, Charles Nemfakos, and Jerry M. Sollinger

Continuing concern over defense acquisition has led Congress to direct the establishment of an office in the Department of Defense to oversee the conduct of root cause analyses on programs that have incurred NunnMcCurdy breaches. Analyses of six programs that have incurred such breaches reveal that many of the causes of the breaches are common to several programs. However, each program is different, and those differences suggest that policymakers should be wary of applying policies that assume all program cost increases stem from common causes.

Reusing DoD Legacy Systems: Making the Right Choice

Meredith Eiband, Timothy J. Eveleigh, Thomas H. Holzer, and Shahryar Sarkani

Department of Defense (DoD) programs often experience cost overruns and technical difficulties due to reuse of legacy systems. With today’s fiscal climate of resource-constrained DoD budgets, reuse of legacy systems is frequently touted as the solution to cost, efficiency, and time-to-delivery problems; however, cost overruns and technical difficulties can significantly diminish any perceived benefits. Through evaluation of eight diverse DoD programs, this research shows that the state of a legacy system’s documentation, availability of subject matter expertise, and complexity/feasibility of integration are key factors that must be analyzed. Based on these three key factors, the authors propose a framework to aid both the DoD and defense contractors in the evaluation of legacy systems for potential efficient and effective reuse.

Valuing the Cost of an Economic Price Adjustment Clause to the Government

Scot Arnold, Bruce Harmon, Susan Rose, and John Whitley

An Economic Price Adjustment (EPA) clause in a contract allows for adjustment of contract price if certain conditions are met. The Department of Defense (DoD) often uses an EPA clause in contracts where there is an increased risk that the costs of inputs used by the contractor will diverge from the forecasts used in the original pricing of the contract. EPA clauses transfer risk from the contractor to the government; thus, they are of economic value to the contractor. This article reviews EPA clauses, analyzes the value of risk transfer, and discusses how DoD could account for this value in negotiating fees for contracts that contain EPA clauses. Other government costs and risks associated with EPA clauses are also discussed.

Current Barriers to Successful Implementation of FIST Principles

Capt Brandon Keller, USAF, and Lt Col J. Robert Wirthlin, USAF

The Fast, Inexpensive, Simple, and Tiny (FIST) framework proposes a broad set of organizational values, but provides limited guidance on practical implementation. Implementing FIST principles requires clarifying the definitions of “fast,” “inexpensive,” and “simple,” recognizing where FIST does and does not apply. Additionally, a subset of the FIST heuristics was expanded upon to increase their usefulness for practitioners. The primary research findings are that FIST principles are less conducive for highly complex or novel systems, immature technologies, future needs, acquisitions in early development phases, or when performance is the foremost value. FIST principles were also found to be constrained by the acquisition process, the requirements process, and oversight.

Defense Logistics Agency Disposition Services as a Supply Source: A DoD-Wide Opportunity

Capt Nate Leon, USMC, Capt Todd Paulson, USMC, and Geraldo Ferrer

The Defense Logistics Agency Disposition Services (DDS) provide centralized disposal management of excess and surplus military property. An important component of its mission is the reutilization of excess equipment within the military services to prevent wasteful purchases within the Department of Defense. This research analyzes the extent to which the U.S. Marine Corps (USMC) is implementing reutilization through DDS as a source of supply. The results and recommendations of this study will enable decision makers within the USMC and the Defense Logistics Agency to address institutional and systemic obstacles to maximize reutilization. Some of the lessons learned herein may be useful to all the military services, resulting in more value from their operations and maintenance budgets through reutilization.

The Challenges in Meeting OSD’s Obligation and Expenditure Rate Goals: A Closer Look at Potential Causal Factors, Their Groupings, and How They Modulate

Col Robert L. Tremaine, USAF (Ret.), and Donna J. Kinnear-Seligman

Managing an acquisition program in the DoD is a complicated process. The turbulence created by funding instability can make it even more difficult. Nonetheless, to help program offices maintain their overall funding execution pace, the Office of the Secretary of Defense (OSD) instituted Obligation and Expenditure rate goals over two decades ago. For numerous reasons, acquisition program managers have found it difficult to meet established Obligation and Expenditure rate goals. For purposes of this article, and based on Defense Acquisition University and OSD subject matter expertise, the authors looked more closely at the potential causal factors that could be interfering with the achievement of these goals.