The United States Army is facing an austere budgetary environment of unknown duration. At the same time, the Army must prepare for a more diverse, burdensome and uncertain strategic environment, from conventional warfare to counterinsurgency. Anticipating these constraints, the Department of Defense (DoD) mandated the use of capability portfolio management in acquisitions, to ensure that an efficient mix of systems is being developed and fielded within strict budgetary limitations. However, broad capability portfolios contain many different fundamental capabilities, which are far from adequately studied. Further, a body of research has documented the extent and causes of cost growth, schedule delay, and cancelation in 'major weapon systems', but relatively less attention has been paid to the smaller, less expensive systems that actually make up the majority of the Army's budget. These observations motivate the performance of two 'fundamental' portfolio reviews within this dissertation that focus, respectively, on anti-improvised explosive device (anti-IED) systems and small arms, which contain a large proportion of less expensive systems. A fundamental capability portfolio review builds 'from the ground up' to assess how well the aggregations of individual developing Army systems provide for each fundamental capability. Ensuring the development of cost-effective fundamental capabilities is a prerequisite to building efficient capability portfolios.

"This document was submitted as a dissertation in January 2013 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Brian G. Chow (Chair), Elliot Axelband, and Fred Timson"--T.p.

Introduction -- Literature review -- Data and methods -- Summary of systems -- Anti-IED systems portfolio -- Small arms portfolio review -- Findings and policy recommendations.