"Of Mice and DoD Weapons Procurement"

The economics of going forward with the Expeditionary Fighting Vehicle.

Dan Seligman in Forbes Magazine 24 Aug 1998 wrote, one of my all time favorite articles; “Of Mice and Economics”.

He discussed “Paul Samuelson-William Nordhaus textbook, Economics, gives sunk costs only a couple of paragraphs, advising: “Let bygones be bygones.” This was mostly in the context of whether George Steinbrenner should put a highly paid pitcher in the game even though he turned out to be a loser.

In the concept of forgetting about sunk costs the rational thing to do would be to bench the pitcher.

Seligman said that a mouse would abandon its litter and reproduce in the future rather than lose its life “saving” the litter; a good decision since the fox or cat would easily dispose of the litter once the mouse were eaten.

According to the text book investments are to be decided upon with out emotional attachment to sunk costs and embarrassment over unanticipated negative results.

The theory of ignoring sunk costs says that the Marines should walk away from the EFV as Joe Torre would bench a bad pitcher and look to a new, less expensive performing alternative.

Extrapolating the GAO-06-349 the Marines will spend $14 Billion in future acquisition and $28 Billion over 20 years attempting to make the EFV work. Why risk $42 B to save face on walking away from $1.2 Billion?

The reliability of the EFV is a problem. If in a test it averaged being sidelined every 24 operating hours that implies to me that in a harsh environment the chance of it doing a 6 hour mission without being shut down for a failure would be somewhere around 70%. I hope the Marines can tow these things back to the ship under fire.

The Marines have always been known for doing a lot with a little, they are now emulating the Air Force and Navy.