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Some Empirical Evidence On The Non-Normality Of Cost Variances On Defense Contracts, Robert J. Conley Iv

Theses and Dissertations

This study tested the hypothesis that defense cost variances reported on the Cost Performance Report are normally distributed. The DOD requires that all defense cost variances which breech a pre-specified threshold be investigated. The present variance investigation model has been criticized because it can prompt frivolous investigations. In theory, statistical models could reduce the number of frivolous investigations, but they are not used because they require too much information about the cost variance, including its distributional form. Often such models assume a normal distribution, but researchers have shown that the models do not work properly if the assumption is fallacious. …