Analysis of Alternatives

The Analysis of Alternatives is a cornerstone of Military Acquisition policy, that of the Office of Management and Budget (OMB) and the United States Department of Defense (DoD). It ensures that at least three feasible alternatives are analyzed prior to making costly investment decisions.[1] The AoA establishes and benchmarks metrics for Cost, Schedule, Performance (CSP) and Risk (CSPR) depending on military "needs" derived from the Joint Capabilities Integration Development System process.[2] It embodies the fair and competitive character of the United States business atmosphere, moving away from employing a single acquisition source to the exploration of multiple alternatives so agencies have a basis for funding the best possible projects in a rational, defensible manner considering risk and uncertainty.[3][4]

Methodology

The AoA assesses critical technology elements (CTEs) associated with each proposed material solution, identified in the Initial Capabilities Document (ICD), including; technology maturity, integration risk, manufacturing feasibility, and, where necessary, technology maturation and demonstration needs. An AoA begins by establishing (or modifying) Key Performance Parameters (KPPs) metrics for each alternative. KPPs help compare the operational effectiveness, suitability, and life cycle costs of alternatives to satisfy the military need.[5]

Process

DoD Instruction 5000.02 requires an AoA in support of each decision milestone: The Milestone Decision Authority (MDA) directs a study team to accomplish the AoA; the AoA then becomes the primary input to the program documents that direct the development of a weapons acquisition program.[6] The results of the AoA provide the basis for the Technology Development Strategy (TDS), which must be approved by the MDA at program's Milestone A.† Though the AoA is executed before any solution is determined, it must be updated throughout the life of the program.

The AoA attempts to arrive at the best value for a set of proposals received from the private sector or other sources. Though Source Selection criteria change per proposal request, and specifics are considered sensitive information, there is usually some form of the Cost Schedule Performance (CSP) trade-space analysis, and strong consideration of Risk, (CSPR). Performance is measured by the US military in terms of Measures of Effectiveness (MOEs), and new capabilities. Risk is analyzed in many ways; aggressiveness of the schedule, cost reasonableness and finally, each MOE, and capability may carry an associated risk. RiskAoA, designed for the AoA process,[7] allows the alternative’s Risks to be transformed into a single number, and compared, just like the dollar values and schedule lengths of the alternatives are comparable.

Risks that affect cost may be evaluated separately from risks affecting an alternative’s schedule and MOEs. The risk from each alternative's capabilities is partially or wholly accounted for with the assumption that every unattained MOE and new capability has some associated risk.

According to the Office of Aerospace Studies, the AoA is the focus of Concept and Technology Development Phase (CTDP). The AoA is designed to examine a broad spectrum of potential alternatives to the mission need described in the Mission Needs Statement. The objective of the AoA is to:[8]

Appendix A of General Services Administration’s (GSA's) IT Budget Submission Instructions (GSA, 2007) states: In order to achieve a Level 1 AoA, Section 300 requires that an organization identify and consider at least three viable alternatives. These alternatives need to be presented in a table that shows: 1. Alternative[s] Analyzed 2. Description of Alternative[s] Risk Adjusted Lifecycle Costs estimate[s] – the overall estimated cost over the life of the investment that has been adjusted to accommodate any risk identified and 4.Risk Adjusted Lifecycle Benefits estimate[s] – projected benefits and costs for each viable alternative. The normalized or advanced results of a RiskAoA analysis provides a proportional risk-multiplier for “Risk Adjusted” values (q.v.). It also states the following quantitative and qualitative benefits should be addressed when evaluating total annual benefits for each alternative:[9]

The AoA may also be important to the System Development and Demonstration Phase (SDDP) and the Production and Deployment Phase (PDP) Activities: Before Milestone C, the decision authority may require a new AoA or an update to a previous AoA to account for any factors that may have changed during the preceding phase. There are many elements in an AoA follow-on effort that are updated, focused, and refined. These elements were originally characterized and developed in the CTDP phase AoA and include:[10]

The AoA and its associated documentation, is required before any major investment decision and before each decision milestone, is therefore one of the most important steps in the military acquisition process.[11]

The AoA differs from the Evaluation of Alternatives (EoA) primarily in that it is conducted during the Materiel Solution Analysis Phase, so an EoA may be used as a continuity document for the AoA. Other analysis processes, such as Analysis of Technical Alternatives (ATA), Analysis of Schedule Alternatives (ASA), etc., also exist as formal processes whose derivation is intuitive, but are not in common use.

† = Milestone A approves entry into the Technology Development (TD) phase; Milestone B approves entry into the Engineering and Manufacturing Development (EMD) phase; and Milestone C approves entry into the Production and Deployment (P&D) phase.[12]

See also

References

  1. ↑ U.S. Office of Management and Budget. Circular No. A–11, Preparation, Submission, And Execution Of The Budget. Washington, DC: Executive Office of the President, 2008.
  2. ↑ http://www.robustdecisions.com/AOA.pdf
  3. ↑ Ullman, David G. Making Robust Decisions: Decision Management for Technical, Business, & Service Teams. Victoria, B.C.: Trafford Publishing, 2006. The Mechanical Design Process, 4th edition. New York: McGraw Hill, 2009.
  4. ↑ Ullman D. G., R. Ast (September 2011). "Analysis of Alternatives (AoA) Based Decisions" (PDF). MORS, Phalanx, Vol 44, No 3. p. 24.
  5. ↑ https://acc.dau.mil/CommunityBrowser.aspx?id=24688
  6. ↑ DOD Instruction 5000.02, USD(AT&L) December 8, 2008 http://www.dtic.mil/whs/directives/corres/pdf/500002p.pdf
  7. ↑ https://acc.dau.mil/CommunityBrowser.aspx?id=126070
  8. ↑ http://www.oas.kirtland.af.mil/AoAHandbook/2.html
  9. ↑ U.S. General Services Administration. IT Budget Submission Instructions: Guide for Major IT Initiatives (BY2009 Exhibit 300 & Exhibit 53). Washington, DC: Office of the Chief Information Officer, 2007
  10. ↑ U.S. Air Force. Analysis of Alternative (AoA) Handbook: A practical Guide to Analysis of Alternatives. Kirtland AFB, NM: Air Force Materiel Command (AFMC‘s) Office of Aerospace Studies (OAS), 2008. http://www.oas.kirtland.af.mil/AoAHandbook, http://www.oas.kirtland.af.mil/AoAHandbook/AoA%20Handbook%20Final.pdf
  11. ↑ http://www.dtic.mil/whs/directives/corres/pdf/500002p.pdf
  12. ↑ https://acc.dau.mil/CommunityBrowser.aspx?id=28965

AoA Related Documentation

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