Cost Growth in Weapon System Acquisition

Abstract

This paper offers a review of the literature on cost growth in the acquisition of weapon systems. A brief history of cost growth analysis is presented, followed by quantitative considerations in Measuring cost growth. An exanination of the empirical literature on cost growth reveals that costs of major weapon systems have consistently been underestimated. The paper also looks at the literature on incentive models and transaction cost economics for root causes of cost growth.