Analytical Examination of Performance-Based Acquisition Strategies

Abstract

This research, under the direction of the principal investigators and support from the Naval Postgraduate School, the Systems Development & Maturity Laboratory at Stevens Institute of Technology, and the Complex Logistics Cluster at the University of North Texas, achieved its overarching goal of developing novel models and analytical techniques to increase the defense acquisition communities return on investment. Three studies were undertaken using a mixed methodological approach. In the first study, qualitative research methods (surveys, grounded theory, and case studies) were used to uncover key characteristics and metrics that are important for a successful performance-based contract (PBC) between a customer and a post-production service provider. In the next two studies, quantitative research methods (econometrics, operations research techniques, and diffusion models) were used to develop analytical models, incorporating the key characteristics and metrics, to assist the acquisition, design, and support communities in making informed business decisions. The analytical models determined the optimal price, length, and investment of a PBC and provided the mechanisms to allocate investment budget between system design and the post-production network needed to support the design. Key findings and business implications are discussed for each study.