The Effects of Incentives in Acquisition Competition on Program Outcomes

Abstract : A review of acquisition program outcomes would make it appear that many acquisition programs are destined to experience recurring schedule slips and cost overruns, and produce poor quality systems. We decry these circumstances, but the acquisition community has had limited success in correcting them. However, the analysis of data collected from assessments of many software acquisition programs has produced insights into some of the most common recurring counter-productive program behaviors. One result of this research has been the identification of a set of misaligned incentives that are a significant force in driving acquisition programs toward poor performance. These types of incentives affect all aspects of acquisition programs, including the competitive forces that are meant to reduce acquisition costs. The system for acquiring defense systems has many misaligned incentives that unintentionally promote program outcomes which are in direct conflict with the stated intent of the acquisition system. These occur in all phases of acquisition, from pre-award to sustainment. Some scenarios illustrating the unintended consequences of acquisition competition include * The consolidation of multiple needs into single joint acquisition programs that contractors must underbid to win creates schedule pressure that drives cost and schedule overruns, and encourages stakeholder programs to opt out, undermining the value of the joint program. * Short-term performance incentives at the program management office can forestall sustainment planning, often omitting contractual delivery of key sustainment tooling--and as a result, may inadvertently lock in the development contractor as the only viable choice for sustainment. This paper illustrates each of these dynamics with a narrative of the experience of an acquisition program, drawn from personal interviews with the program office and contractor staff.