How does the cost performance of defense contracts vary among services and contractors? Evidence from major defense acquisition programs (MDAP)

摘要

This research examines how the cost performance of defense contractsvaries among the Air Force, Army, Navy, and the Department of Defense(DoD) and among five major defense contractors: Boeing, LockheedMartin, Northrop Grumman, Raytheon, and General Dynamics. Data forthese analyses was extracted from the recently established DefenseAcquisition Management Information Retrieval (DAMIR) web-basedinterface for management information on Major Defense AcquisitionPrograms (MDAP). Note that, in addition to the three military services,MDAP data is also reported for DoD itself. Data analysis indicates that the Navy ranks last among the militaryservices and DoD in cost performance for MDAP contracts, while the AirForce ranks best. Of the defense contractors, Raytheon ranks last in costperformance and General Dynamics is next to last. Furthermore, theNavy contracts more frequently with Raytheon and General Dynamicsthan do the other services or DoD. Explanatory factors for poor costperformance may be due to factors such as the Navy’s lack of oversight,the quality of the acquisition workforce, the defense contractors’ costinefficiency, ethical lapses, or weak corporate governance, or combinationsof these factors.In addition, the schedule performance data was also identified. Tests ofstatistical significance on the schedule performance difference generallyyield no results except for one relationship which indicates that the Navyis more likely to have Acquisition Program Baseline (APB) schedulebreaches than its counterparts. Finally, cost performance data isexamined for statistically significant differences between the two majorcategories of defense contracts: fixed-price contracts and cost-pluscontracts. However, no significant findings were discovered.