A research paper co-authored by Ricardo Valerdi, associate professor of systems and industrial engineering, recently won first prize in a competition aimed at making defense acquisition more efficient.
The competition, titled "Doing More Without More," was organized by the alumni association of the Defense Acquisition University, a U.S. government university that caters to personnel working in defense acquisition.
"In an age of government budget cuts, large contractors like Lockheed Martin, Boeing, and Northrop Grumman are being more heavily scrutinized for their costs," Valerdi said.
Valerdi suggested holding contractors accountable for their cost estimates and cost performance. This accountability, he said, would "limit the government's ability to commit to too many programs, and ultimately reduce the cost growth that continues to plague the defense acquisition system."
In their paper, titled "Enhancing Cost Realism Through Risk-Driven Contracting: Designing Incentive Fees Based On Probabilistic Cost Estimates," Valerdi and his co-authors, Major Sean P. Dorey of the U.S. Air Force and MIT's Josef Oehmen, proposed a contract structure that puts pressure on defense contractors to make proposals more realistic.
Valerdi and his co-authors argue in their paper that cost estimates in defense contracts are far too optimistic. Their proposed solution is "risk-driven contracts," which Valerdi said, "expose contractors to more cost risk during engineering and manufacturing development programs."
First prize was $1,000, and the paper will be published in the April 2012 issue of Defense Acquisition Research Journal.
Valerdi is a systems engineer and an expert in the growing field of enterprise transformation and cost estimation. He received his bachelor's degree in electrical engineering from the University of San Diego in 1999, and his master's in systems architecture and engineering in 2002 from the University of Southern California, where he also got his doctorate in industrial and systems engineering in 2005. He joined UA Engineering in 2011 from MIT's System Design and Management program.
Valerdi's research areas include enterprise transformation, human systems integration, systems engineering metrics, cost estimation, testing and evaluation, and performance measurement. His research has been funded by the Army, Navy, and Air Force, and by IBM, Lockheed Martin, and BAE Systems. He is the founder and co-editor-in-chief of the Journal of Enterprise Transformation, and has served on the board of directors of the International Council on Systems Engineering