Measuring Changes in Service Costs to Meet the Requirements of the 2002 National Defense Authorization Act
Abstract
The National Defense Authorization Act for Fiscal Year 2002 sets forth a series of goals for the Department of Defense to reduce the cost of the services it buys over a ten-year period through changes in contracting practices and improvements in management techniques. This study investigates ways to measure whether the Air Force is achieving these cost-reduction goals and discusses the most important steps in the measurement process. Successfully estimating changes in service costs over time first requires establishing a baseline, i.e. expenditures that occurred in the base year, for a clear universe of services that permits a consistent comparison of service purchases over time. The second step in the process is to estimate the expenditures on these services for the current fiscal year. A fundamental part of constructing the current-year expenditures is to control for any changes in the nature of services purchased over time, including changes in the scope of services, and, to the extent possible, changes in quantity and quality. The next step is to apply an appropriate measure of inflation to the baseline expenditures to estimate what those services would have cost in the current year in the absence of changes in contracting practices and management techniques. After the baseline, current year, and without-management- change costs have been estimated, the final step is to calculate the savings achieved and compare them with the goals.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 2004
- Accession Number
- ADA438967
Entities
People
- Chad Shirley
- John Ausink
- Laura H. Baldwin
Organizations
- RAND Corporation