A common assertion in defense literature is that an unstable budget baseline contributes to cost overruns on defense acquisition contracts. Using cost performance data from over 400 defense acquisition contracts, we tested this assertion. The stability of the baseline was characterized by the number of significant changes to the budget, and by a statistical measure of the baseline's variability, the coefficient of variation. Cost performance was characterized by cost and schedule performance indices. Using 2 statistical methods, we found no significant relationships between baseline instability and cost overruns. Further, these results were insensitive to the managing service, the buying activity, and the contract type. Changes on a defense contract are not compelling rationale for cost overruns. Other possible causal factors should be more closely examined. The views expressed in this paper are those of the authors and do not reflect the official policy or position of the Department of Defense of the U.S. government.
