F-22A Multiyear Procurement Program: An Assessment of Cost Savings

by Younossi, Obaid; Arena, Mark V.; Brancato, Kevin; Graser, John C.; Goldsmith, Benjamin W.

• ISBN13: 9780833041968
• ISBN10: 0833041967
• Format: Paperback
• Copyright: 2007-09-24
• Publisher: RAND Corporation

Summary

Congress asked RAND for an independent review of whether the estimated savings from proposed multi-year contracts for 60 F-22A aircraft over three years would yield the promised savings. Researchers found that a multi-year procurement of three lots of F-22A fighters would save an estimated $411 million-about 4.5 percent of the total contract value-and that savings attributed to the multi-year contract by the contractors appear to be reasonable.

Table of Contents

Preface
Dedication
Figures
Tables
Summary
Acknowledgments
Abbreviations
Introduction	p. 1
Background	p. 1
Purpose of This Report	p. 3
Research Approach	p. 3
How We Went About This Research	p. 4
Organization of Report	p. 7
The Basics of Multiyear Contracts	p. 9
Multiyear Contract Requirements	p. 9
Criteria for Using Multiyear Production	p. 10
Basic Components of the F-22A Contract	p. 11
F-22A Program Content Not Included in the Multiyear Contract	p. 13
Funding for Production	p. 13
Cost Reduction Initiatives	p. 15
Program Acceleration	p. 16
Multiyear Contract Modifications Possible	p. 16
Stability in F-22A Configuration Is Paramount During the MYP Contract	p. 17
Estimating Single-Year Procurement Price	p. 19
Introduction	p. 19
Scope of the Estimate	p. 20
Estimating Approach	p. 21
Data Sources	p. 21
Level of Detail	p. 23
Forecasting Method	p. 24
Other Adjustments	p. 27
Price Model Structure	p. 29
Results	p. 32
Summary	p. 34
Categorization and Substantiation of F-22A Multiyear Contractor-Proposed Savings	p. 35
Evaluation of the Proposed Savings Initiatives	p. 35
Quantitative Factors in Multiyear Contracts	p. 38
Qualitative Factors	p. 43
Areas Where Little Of No Savings Occur Under MYP	p. 45
Summary	p. 45
A Look at the History of Aircraft Multiyear Contracts	p. 47
Introduction	p. 47
Varying Key Program Attributes of Historical MYP Contracts	p. 49
Validation of Claimed Savings	p. 49
Military Fixed-Wing MYP Contracts, 1982-1995	p. 53
Military Fixed-Wing MYP Contracts Since 1995	p. 57
Observations on the High-Level Historical Overview of MYP Savings	p. 62
Summary Conclusions	p. 75
Results and Findings	p. 77
Calculation of the Savings Percentage	p. 78
After-the-Fact Analysis of F/A-18E/F Multiyear Savings	p. 81
Reasons for Multiyear Savings from Previous Reports	p. 93
Tail-Up Analysis	p. 101
Institute for Defense Analyses Report Summary	p. 105
Military Fixed-Wing MYP Since 1995	p. 111
References	p. 135
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