Calculating Return on Investment in a Department of Defense Context: A Pilot Study

Abstract

With few exceptions, there does not exist a generic framework for reliable calculations of return on investment (ROI) with Department of Defense (DOD) that effectively take into account the unique mission values for DOD acquisition. This research explores the questions of whether the DOD can benefit from such an ROI acquisition model, and how that model may be implemented. In this paper, the researchers examine methods by which the DOD currently approaches acquisitions and what methods are used for creating Request for Proposals, evaluating bids, and awarding contracts. This information is then contrasted with how the private sector applies ROI models in acquisitions to identify critical differences and challenges in applying these methods to the DOD. Our results support that an ROI model can be built to encompass DOD objectives to enable the acquisition of superior systems and services and at the same time speed the contract process, better aligning bidders' interests with the DOD and addressing critical acquisition issues. Further, this research identifies specific areas where such a model can be applied in the short term to increase efficiency in internal acquisition data analysis and examines using a Single Source of Truth (SSoT) framework.