Air Force experience with should-cost reviews and options for enhancing its capability to conduct them

The problem of cost growth in major weapon system acquisition programs has plagued the Department of Defense for several decades. Recent Air Force and Department of Defense guidance has emphasized should-cost reviews--a special form of contract cost analysis intended to identify contractor inefficiencies and lower costs to the government--as a way to address this problem. This report examines the Air Force experience with should-cost reviews and discusses options for enhancing the Air Force's capability to conduct such reviews. The researchers interviewed participants in should-cost reviews of Air Force programs from the 1980s through 2011 and reviewed the literature on the use of should-cost reviews by the Department of Defense and commercial businesses. They found that few Air Force personnel have experience with should-cost reviews but also that there is little evidence that should-cost reviews save money compared with other forms of contract pricing and negotiation. The authors discuss options for establishing a dedicated Air Force capability to conduct should-cost reviews, but they recommend that the Air Force first confirm the effectiveness of such reviews.