Examining the Institutional Factors Affecting Cost Growth in Defense Acquisition: May Yield More Effective Policy Interventions

Abstract

Existing studies of cost growth in defense acquisition have been predominantly descriptive rather than explanatory. While observers of defense acquisition acknowledge the role of cultural and institutional factors on program performance, few studies are focused there. However, recent studies have highlighted the importance of decision-making by government officials as a factor affecting cost growth. Informed by the literatures on cost growth, behavioral finance, group decision-making, and organizational failure, this report proposes a research stream to consider factors affecting cost growth beyond those traditionally studied. The study suggests that Ostrom's Institutional Analysis and Development framework can be the foundation of a research stream that includes both field studies and laboratory/computational experiments that can provide fresh insights into the cost growth phenomenon and more importantly aid in the design of more effective policy interventions to address the problem.