Root Cause Analyses of Nunn-McCurdy Breaches

Congressional concern with cost overruns, or breaches, in several major defense acquisition programs led the authors, in a partnership with the Performance Assessments and Root Cause Analysis Office in the Office of the Secretary of Defense, Acquisition, Technology, and Logistics, to investigate root causes by examining program reviews, analyzing data, participating in contractor briefings, and holding meetings with diverse stakeholders. In a companion study, the authors investigated cost overruns in four programs. The current study analyzes cost overruns in the Navy Enterprise Resource Planning (ERP) program and Excalibur (a 155mm extended-range guided artillery projectile). In addition, it develops some exploratory concepts of program risk and complexity as factors in the management of program acquisition. In spite of the cost growth associated with the ERP program, it can be considered a qualified success. The program was re-baselined in 2006 and, since then, costs have stabilized and production delays have been limited. The authors determined that the primary driver of cost increases in the Excalibur program was the change in procurement quantities, specifically, a 79 percent reduction in rounds ordered. Inaccurate cost estimates, changes in concepts and technology, and urgent operational needs also contributed to the overruns.