Improving Acquisition Through Innovation in Workforce Incentives

Abstract

The DoD spends approximately $200 billion annually to develop, acquire, and sustain weapon systems. It relies on regulations, statutes, and business processes to ensure these systems are delivered cost-effectively while meeting system performance and schedule requirements. The acquisition system has delivered superior weapon systems with leading edge capabilities, providing a military advantage, but has a less-than-impressive track record for cost-effectiveness and on-schedule performance. Several approaches have been proposed, discussed, and debated to improve defense acquisition. Incentives for the workforce are chief among them. This paper proposes a model for altering the compensation structure of the workforce, tying it to the cost, performance, and schedule achievement of the programs to which the workforce is assigned. The underlying premise is that introducing an economic incentive and thereby a sense of ownership in acquisition outcomes to the workforce sector setting is critical to achieving efficiencies. This paper examines current research on financial incentives and performance improvements at the individual and organizational level as a basis for a performance-based compensation model.