Fixing the Flawed Nature of DoD BCA’s Industry Focus
Author: William G. Williamson
Category: White Papers
The government is not a business that is profit-oriented. Monetary business metrics as a means of determining what items to consume are inherently flawed for the government since metrics such as Return on Investment assume the organization is a provider of the goods or services, not a consumer. A better approach for the government would be to measure the areas that the government most values, i.e. schedule, requirements, and cost. Using those areas as anchors, a best value metric can be developed, pointing the government to smarter acquisition decisions.
The financial metrics used by most for-profit businesses in the United States include both Cash Flow Metrics and Financial Statement Metrics. Cash Flow metrics are used for evaluating investments and streams of cash flow events and include net present value (NPV), return on investment (ROI), and internal rate of return (IRR).