THE PAPER | An Integrated DEA-AHP Model for the Military Technology Acquisition
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THE PAPER | An Integrated DEA-AHP Model for the Military Technology Acquisition

 By JaeHun Moon and Seokjoong Kang

In this article, we propose a Data Envelopment Analysis (DEA) and Analytic Hierarchy Process (AHP) integrated model to improve the selection process in the acquisition of a weapon system which is the key component to the success of the project. 

THE PAPER | An Integrated DEA-AHP Model for the Military Technology Acquisition

In particular, we applied DEA in the first stage to choose a frontier group among the candidates in the selection process of the next-generation fighter system (the 3rd FX) in Korea. Then, by using the Delphi technique, we surveyed military experts and applied AHP to determine the best choice among the candidates. 

Acquisition of a Weapon System 

Military products are largely classified as weapon and non-weapon systems. The weapon system includes all the field weapons (e.g., guided weapons, aircrafts, and vessels) and all other operating products (e.g., parts, facilities, and software) that are necessary in a war. The non-weapon system includes all the elements other than the ones that are classified as the weapon system (e.g., equipment, parts, facilities, software, and materials).

The acquisition is categorized as either a domestic acquisition that purchases internal products or a foreign acquisition that purchases foreign products. The foreign acquisition in Korea is further categorized as either foreign military sales (FMS) or foreign company purchases (FCP). FMS is an acquisition that is controlled and guaranteed by the US government through a contract between the US and Korea. FCP, on the other hand, is a direct acquisition from foreign companies without any government involvement.

Acquisition Procedure

The two most common contract methods that follow the national contract law in Korea are the lowest bidding and negotiation. The lowest bidding method is a basic method, and the negotiation method is acceptable in a special case according to the national contract law. Even though the lowest bidding method selects the lowest bidder, some big projects that are above a certain level also utilize screening tests to test the capability of the bidder.

Typically, the procedure for selecting suppliers follows several phases:

1) The assessment readiness and the assessment of a proposal,

2) The evaluation of the products,

3) Negotiation, and

4) The final selection.

The assessment readiness for a project consists of writing the request for proposal (RFP), the announcement of bidding, the formation of the assessment committee, and the development of an assessment plan including the assessment criteria. One difference between a purchasing project and an R&D project is that the former assesses each item for a specific project (e.g., selecting the next-generation fighter system), and the latter assesses the common items that are equally applicable to all future projects.

There are necessary and optional conditions in a purchasing project. The necessary conditions are essential items for the required operational capability (ROC) and should be satisfied. The optional conditions are the assessment items other than the necessary conditions and should satisfy a certain level of satisfaction (generally, 70%) on the RFP. ROC is used for determining what the Korean government wants to purchase in terms of the capabilities of the weapons. Once the ROC is complete, the Ministry of National Defense makes a budget and initiates the procurement process so that the potential suppliers can enter the bidding process. The RFP is a solicitation made often through a bidding process by an agency or company interested in the procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals. It is submitted early in the procurement cycle either at the preliminary study or the procurement stage. The RFP presents preliminary requirements for the commodity or service and may dictate to varying degrees the exact structure and format of the supplier’s response. Effective RFPs typically reflect the strategy and short-/long-term business objectives, providing detailed insight upon which suppliers can offer a matching perspective.

After assessing the proposal, the government evaluates the products to select initial products that satisfy all necessary conditions and meet or exceed the suggested level requirements for optional conditions. Therefore, usually, multiple products are selected at this stage. A negotiation process then follows on the basis of factors such as price, technology, and general conditions.

Then, the government selects the final product by typically applying either the lowest cost while satisfying the requirements of the ROC method or the comprehensive evaluation method. The former is the most common method, but the latter can be used when the comparison between the suggested products is complex and/or when the project is so big that it requires many strategic considerations. The RFP usually includes the determination method in the original announcement of bidding. Then, a provisional contract is signed by both parties (i.e., the Government and the suppliers).

In a big investment case such as the acquisition of a weapon system, the failure of the project lays a lot of burden on both the buyer and the seller. However, because of the unique characteristics of the military industry, neither party acknowledges its mistakes. Therefore, the reasons for failure are not available to the public and not much has been done to analyze the failures.

However, a failure analysis is necessary because its learning effects are very helpful for future project management. The causes of project failures can include errors of cost analysis, improper setup of the operational concept, unrealistic targets, and miscommunication between the project manager and the supplier to name a few. However, the most common cause of the project failure is found in the phase of selecting suppliers/business partners. The following section discusses decision-making models that can be used in the selection process.

The Third FX Project in Korea

Recently, the Korean government selected F-35A as the next-generation fighter system. The general selection process is as follows: first, the government investigated many candidates including F-35A, F-15SE, and Euro-Fighter. After evaluating for more than two years, the government selected F-15SE as the next-generation fighter system in August 2013. After this decision, there were considerable opposition from the press and the national security experts, including the former Air Force Chief of Staff, partly because F15-SE lacked stealth capabilities. Then, the Korean government re-negotiated for about five months and finally, selected F-35A as the next-generation fighter system. This is a good example that shows why we need a more systematic decision-making process; in this paper, we try to shed light on such studies. The following section introduces two of the most widely used decision-making models, which will be incorporated in our study.

The Concept of AHP

Analytical Hierarchy Process (AHP) is a method that improves the inefficiency in the decision-making process. It is part of a decision support system that systematically assesses alternatives when there are multiple and complex objectives and/or the evaluation criteria. 

Chart Attribute: A typical AHP model / Source: Palgrave Macmillan

Chart Attribute: A typical AHP model / Source: Palgrave Macmillan 

Such criteria can be either quantitative or qualitative, and AHP can measure these criteria as proportional scales after quantifying these qualitative criteria. Therefore, the method can be used in non-standard and complex problems. In fact, Saaty argues that the AHP is a useful decision-making tool in a complex decision-making situation with multiple objectives, evaluation criteria, and participating decision makers. The process determines the priority of the alternatives through a series of pair-wise comparisons after categorizing the criteria into multi-hierarchical levels.

Vargas asserts that the theoretical underpinnings of AHP lie with four axioms: reciprocal comparison, homogeneity, independence, and expectations. The reciprocal comparison axiom means that decision makers should be able to make pair-wise comparisons of two factors in the same hierarchy in terms of preferences and the reciprocal strength of the preferences should exist. Homogeneity means that the preferences should be expressed by means of a bounded scale. Independence means that the criteria should not be related to the properties of the alternatives. Expectations mean that the hierarchical structure is assumed to be complete.

Because of its usefulness and simplicity, AHP has been used in various decision-making situations including marketing, project and risk management, strategic planning, information technology selection, employee recruitment, production, and medical and health-care.

Typically, AHP has five phases:

1) Formation of hierarchy,

2) Pair-wise comparison of the factors and alternatives,

3) Estimation of the weighted values,

4) Consistency check, and

5) Selection of the best alternative.

In the first phase, a decision hierarchy is formed. The goal is at the top level followed by the evaluation criteria and the alternatives are at the bottom. The evaluation criteria sometimes have sub-criteria.

In the second phase, a series of pair-wise comparisons between the factors in the same hierarchy are implemented to determine the priority of the factors from the viewpoint of the upper-level hierarchy. Further, in this phase, the pairwise comparisons between alternatives are performed to obtain the initial priorities of the alternatives.

In the third phase, the weighted value for each factor is determined using the eigenvalue method. The weighted values are subjective, and this relative judgment cannot guarantee the internal consistency. Therefore, the consistency of the judgment is evaluated in the following phase.

The consistency of the decision makers (i.e., whether the judgments made by each decision maker are logically consistent or not) is evaluated in this phase. If, for example, a certain decision maker’s judgment is such that alternative A is more important than alternative B, and alternative B is more important than alternative C, then it is considered consistent. This can be found out by calculating the consistency index (CI) and the consistency ratio (CR) for the evaluation criteria. CI and CR can be calculated by the following formula and considered to have rational consistency if CR is less than 0.1, acceptable consistency if it is less than 0.2, and deficient consistency otherwise.

CI= (λmax-n)/n-1

where λmax denotes the maximum eigenvalue of a pair-wise comparison matrix.


where the random index (RI) is a CI calculated by a computer simulation based on non-consistent pair-wise comparisons.

In the final phase, a comprehensive vector of importance is calculated to determine the priorities of the alternatives. First, the vector of importance between factors in each layer is multiplied by the vector of importance on each factor’s alternative. Then, the rankings of each alternative are determined and the alternative with the highest ranking is selected as the best alternative.

To learn the application of DEA-AHP integrated model in the selection process of the South Korean – Next Generation Fighter System, Download the Paper – LINK

About the Authors:

Currently serving as a special committee member at Korea Institute for Defense Analyses (KIDA), Seoul, Republic of Korea. He graduated from the Korea Military Academy in 1985 and National Defense College in 1992. He received his M.A. from Graduate School of National Defense Management, Korea National Defense University, and completed his doctoral course in Management of Technology at Korea University. During his service in the ROK Army until 2011, he successively filled various posts, such as Plan Management Instructor at Korea Army College, Chief of Financial Management of Army Capital Corps & 22nd Army Division, Vice Director of the Budgeting Control Bureau at the Headquarter of the Army, and Chief of Financial Management Office/Division at the US-ROK Combined Forces Command (CFC).

Received his B.S. and M.S. in Computer Science from Indiana University in 1988 and 1991, respectively, and his Ph.D. in Electrical Engineering and Computer Science from University of California, Irvine, in 2003. He worked as a lecturer and research staff at University of California, Irvine. He also worked as a principle researcher at Samsung Electronics Co. from 2004 to 2006. Currently, he is an associate professor at the Department of Management of Technology for Defense at Korea University, Seoul, Korea. His publications include “A Management Procedure of Required Operational Capability for Low-cost and High-efficiency” (2012), “Weapon Systems Development,” and A Study on the Factors Affecting the Results of Negotiations of Overseas Weapon Purchase” (2010). His research interests include decision systems for defense acquisition, acquisition process, and system & software engineering

Publication Details:

An Integrated DEA-AHP Model for the Acquisition of a Weapon System: Selection of a Next-Generation Fighter System in Korea, Journal of Information and Communication Convergence Engineering. 2015. Jun, 13(2): 97-104  DOI :

Copyright © 2015, The Korean Institute of Information and Communication Engineering

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