'Does A Rubber Baseline Guarantee Overruns?' A Study of Cost Performance and Contract Changes in Major Defense Acquisition Programs

This is a AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH report procured by the Pentagon and made available for public release. It has been reproduced in the best form available to the Pentagon. It is not spiral-bound, but rather assembled with Velobinding in a soft, white linen cover. The Storming Media report number is A133913. The abstract provided by the Pentagon follows: This thesis explores the assumption that cost overruns are related to contract changes. A common assertion in defense literature says that contracts which are relatively stable suffer smaller overruns than those which are highly volatile. The stability or volatility of contracts is characterized by their change history. A contract which is modified frequently or by large amounts is more unstable, or volatile, than one which is not changed either as often or by lesser amounts. This study attempts to find evidence supporting this common assertion by examining the relationship between cost growth and baseline stability on over 400 Major Defense Acquisition Program contracts over the last 26 years. The results are intriguing because, counter-intuitively, no significant evidence is found. Possible explanations and implications of this discovery are provided.