Research On U.S. Defense Acquisition Performance In The Perspective Of Dynamic Capability

High technology has played an increasing important role in weapon's R&D,and military specialization has become more and more segmented;acquisition of weapon systems has relied on much more on technologies and costs.Situation of “schedule delay,technical target reduction,cost overrun(STC)” has been prevalent in the weapon acquisition of all over the world.Cost overrun puts much more pressure on defense budget,schedule delay hampers the upgrading of weapon systems,while technical target reduction decreases the realization of military capability.The problem of STC keeps emerging,while all over countries push a good deal of acquisition reforms and management proposals,especially the USA.Although the problem of STC still exists,performance of some weapon systems has improved.The problem of STC is in fact the problem of performance in weapons' program management,of which the main indexes are cost,schedule and technical performance.Therefore,the thesis tries to analyze problem of STC in the perspective of dynamic capability,find out the root causes behind differences of performance,and put forward some countermeasures in the aim of making references for China's defense acquisition performance.Dynamic capability,in the opinion of most researches,is integrated research architecture of constructing the classification,evolution and effect of the theory.In the view of capability effecting resource,the theory does empirical research on the basis of some specific business model.The uncertainty of defense acquisition agrees well with the theory of dynamic capability,of which method is suitable for actual cases in defense acquisition.While technical performance is not in the range of economics papers,our thesis researches acquisition based on weapons' costs and schedules.The thesis does research according to the logic of “what-why-how”.In the perspective of dynamic capability,the paper discusses what defense acquisition performance is and why defense acquisition performance is not as good as expectation,and much more attention is paied on improving defense acquisition performance.Basic structures are as follow: chapter 1 is introduction,introducing background and meanings,clarifying objects,summarizing research contents and methods and putting forward innovation points.Chapter 2 describes stastatic charactrists of STC and their problems,which answers “what and why” question.Chapter 3 is the theory framework and basis of the paper.Chapter 4 to 6 are empirical analyses,answering “how” to improve defense acquisition performance.Chapter 4 and chapter 5 respectively analyze how to inform dynamic capabilities to improve defense performance,while chapter 6 arguments the above points by case study.Chapter 7 summarizes results and puts forward policy references and the next research trend.On the basis of literature,the thesis mainly does the following work:1.Reviewing the research status of U.S.defense acquisition performance,it establishes the basis in literature review and basic theories.Reviewing the papers of influence factors and improving ways of U.S.defense acquisition performance,the paper on one hand analyzes the common factors influcing defense acquisition performance,clarifies five factors of military demand,technical risk,fund allocaiotn,project management and economic conditions,and finds out that current research lack relevant study,especially the influencing and root factor analysis.Chapter 2 describes characteristics of defense acquisition performance and their key causes,it turns out those causes are of uncertainty,among which equipment demand uncertainty is main reason and uncertainties of politics and technology are root causes.On the other hand,it finds out the common research way---case study and data analysis(usually with security),the paper analyzes the situation and its adaptivity and comfirms tha final research method: case study,statistic analysis,logic derivation and simulation analysis.Meanwhile,uncertainty is the starting point of the whole paper,it explores the theory adaptivity of dynamic capabilities and the the theory basis.2.Seting up the theoretical analytical framework in the perspective of dynamic capability.Dynamic capability is a firm's strategic buffer confronted with the uncertain environment,Defense Acquisition System(DAS)should be managed as an enterprise to improve defense acquisition performance.The paper sets up the research frame as follows:(1)DAS's organization should be treated in a new way.(2)Nature of dynamic capabilities in DAS.(3)Dynamiic capabilities in DAS could be divided in three aspects.(4)It analyzes the DC mechnizm: DC should be formed through process flexibility represented as tailoring on the basis of program process,product attribute or product cycle.Acquisition process tailoring should be finished oriented with weapon demand perception and supported in two ways.One way is in technology named as equipment modularization,the other way is in organization named as organization flexibility.3.Analyzing the effecting mechanism in the aspect of technology flexibility.(1)Through index of trasfering range,time and cost of technology flexibility,it turns out that equipment demand modularization is the new developing direction of equipment R&D and production,which means equipment system is divided into modules,each subsystem is treated as dependent modules.From the development of weapom modularization,capabilities in technology flexibility have improved.(2)Based on the modified model of Baldwin & Clark(2004),the paper analyses the option value of modularity in weapon design.While mathematical analysis shows that technology flexibility is the best choice for an enterprise in dynamic environment.(3)Equipment demand modularization forms DC in the technology aspect.Modularity reduces acquisition costs in different degrees from economy of scale and substitution;as well as reduces development and production cycles from parallel engineering.4.Analyzing the problem of Nested Institutional Hierarchy(NIH),and arguing the improvement of organization flexibility on U.S.defense acquisition performance in system dynamics model.(1)The capability in organization flexibility lie in the attribute of organizaiotn,and organization flexibility contributes dynamic capabilities.(2)It discusses the intermediating role of organization flexibility in dynamic capabilities to performance.U.S.military acquisition milestone review is a typical NIH,the paradox between formalization and informalization,complexification and simplification,certralization and decentralization inside organizations decrease the quality and speed of information transfer,and causes some degree of decision delays to affect the acquisition performance.(3)Modeling the problem of NIH,according to three stages of defense acquisition flexibility,it analyzes the inside and outside factors of decision delays.(4)Modeling the problem by using the system dynamics Vesim method,it analyzes three types of milestone review processes including traditional four-level,current four-level and three-level integrating IPT and information sharing,moderating key parameters about organizations and forming different figures after model check and unit check.(5)According to the modeling figures,bullwhip effect exists in the organization communication,which means information is twisted and violated in bigger range while transmitted among groups.Information twist is less in three-level command chain than that of four-level.However,if information is transmitted in the way of traditional hierarchical organizations do,information sharing is ignored as usual,information twist is lessen little in different level organizations,which is hard to respond fast changing environments.Especially in the current decision delay of four-level command chain with information sharing,middle and top managers,such as Service Acquisition Officers(SAE)are overloaded with huge information,who has become the managers with actual controlling power.The conclusion is true for the current U.S.military situations and policies.5.Arguing the improvement of technologh and organization flexibility on U.S.defense acquisition performance in case study.(1)It introduces the thingking ways of case study and choses three cases according our standards.(2)It evaluates the effecting way of technology flexibility on defense DC.The first case tells us performance differences behind technology flexibility in weapon demand modularizaiton,and the second case compares Aegis and the other equipments.The result shows that modularity could realize the interoperability and increase the capability of technology interface,so as to improve the adaptability under turbulent circumstances.Technological progress of Aegis---upgrading from baseline 0 to 9.0,implies the development of defense modularization,while its degree experiences from product and design to organization and product network modularization.(3)In order to solve this problem,U.S.Department of Defense has made flexibility reforms in vertical command chain of program management,including flattening organizational level,divisional grouping,and information network,in the aim of adjusting to environmental changes.(4)The Aegis system is the classical example of U.S.modularization in weapons' design and production.The indicators of cost and schedule of representative weapons of Aegis are much better than that of programs in the same period,of the same type,of the same service and from the same main contractors.It is believed that weapon modularization is one useful way to improve acquisition performance.6.Discussing the present situation of our equipment acquisition and putting forward policy advices accoding to research results.Nowadays,our equipment acquisition has not realized the integreated project responsibility system.Learned lessons from U.S.acquisition experiences show that organization adaptivity under the dynamic circumstances is the future development trend.Policy implications are summarized as:(1)scalability should be considered in performance evaluation system.(2)Process flexibility is realized on the basis of controlling.Four conditions of realizing process controlling include that(a)regulations and guidebooks are implemented,(b)integrated reviewing by services in advance,(c)independent organizations of evaluating cost and technology are established,(d)integrated data platform is established.(3)Demand modularization should be planned in both aspects of the government pushing from top to bottom as well as market pulling from bottom to top.While the government planning is the key point and the industrial development is the basis.(4)Organization flexibility should be realized on the basis of authorization,coordination and motivation.Defense acquisition project management should form dynamic capabilities in both sides of technology and organization,so as to cope with the dynamic environment with charestics of demand uncertainty and to improve defense acquisition performance.