Case Study of Risk Management in the USAF B-1B Bomber Program

Book excerpt: This case study was undertaken in conjunction with six others to develop a better understanding of the risks involved in weapon system development and whether government policies effectively aid in the management of those risks to reduce the probability or severity of negative outcomes. The purpose of the larger study of seven Air Force procurement programs is to provide information that might improve the decision environment in which weapon systems are procured and thus to increase the probability of positive outcomes. This case focuses on the procurement of the B-1B bomber and covers the procurement of the entire aircraft platform and its component systems. The B-1B, with a direct program acquisition cost of $20.5 billion in 1981 dollars, represents a mixed array of technical advances depending on the component part examined. The case study identifies risk-related decisions made early in the program prior to or at the start of full-scale development. The assessments of risk and its subsequent management are then tracked to show how the early risk management decisions affected the program. The term risk, as used throughout this paper, is the probability that, given that an activity is undertaken, an event will occur that has negative outcomes for those involved. This case study (1) identifies acquisition practices that shape and manage risk and (2) suggests possible improvements.