Master's Thesis by Nikolaos Gounatidis for the AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING
Abstract : Many of the major programs of the DoD are experiencing cost growth. This research developed an empirical model in order to explain cost overruns. This thesis sought to discover relationships between cost overruns and factors that originate from the political nature of the defense acquisition process. The model describes how the political and legislative balances of power between the parties of the Congress, the change of the purchase habits of the DoD from production to service contracts, and the spreading of defense manufacturing capacity across the U.S are related to cost overruns. This research studied 193 programs from 1970 to 2002 using OLS regression techniques. Results show that a Democratic President leads to a reduction in cost growth, while control of both houses of Congress by one party, or control of the Senate and the office of the President by one party causes cost increases. Furthermore, the results showed that the switch from production to service contracts doesn't reduce cost growth. On the contrary, reduction in the annual cost overrun percentage is observed prior the switch from production to service contracts. Finally research highlighted that the dispersion of defense manufacturing capacity across the country inflates cost overruns in DoD programs.
