Original Post Date: Wednesday, September 29, 2010

About 75 aerospace & defense (A&D) sector leaders met at an executive summit in Annapolis, MD several weeks ago. Among the topics was a warning about growth in the amount of overruns in the A&D sector. Deloitte produced an analysis of the overrun of major defense acquisition programs relative to their baseline price which showed an unappealing straight-line growth – 26% (growth over baseline) in 2008, projected to be 46% by 2018. A conclusion being tossed about was that the country cannot afford a future like this. Didn’t Norm Augustine come to a conclusion like this 25 or so years ago? I like Norm’s warning better than the Deloitte warning – Norm wrapped his in humor, while the Deloitte straight line analysis expects one to believe that the overrun percentage in 1993 was zero – no variance to baselines for any major defense acquisition programs.

Evaluation of 269 completed defense acquisition contracts from 1988 to 1995 showed no improvement in the 20% average overrun, despite initiatives undertaken to rein in the overrun situation. Doesn’t sound like zero or near zero average overrun amounts in A&D in 1993 is believable, does it? Sure made an exciting story at the Annapolis summit though, I bet.     

Bruce Fad
VP Professional Services, PRICE Systems