Competition in Defense Acquisitions

Abstract

Abstract : Competition is a driving force in the U.S. economy and a vital component of efficiency and improved market performance. Congress has mandated its use. From a defense perspective, the mandate is simply stated - competition is beneficial; maximize its use. There are many differences between the defense market and the commercial market, and understanding these differences is a necessity prior to developing acquisition policies and strategies. Differences in products, market structure, prices, outputs, risk and profits all have major effects on the type and level of competition. The role played by DoD in not only buying goods from firms but also in regulating the defense market is one of the many features that makes the DoD acquisition environment distinctive from other markets. Other distinguishing factors include single buyer, the prospect of government-owned facilities, barriers to market entry, import/export controls, barriers to exit, multiple objectives, the politics of national defense, and the unpredictability of national security requirements. If properly accounted for, DoD can leverage its ability to make the rules and enforce them to ensure competitive practices are being maximized in light of these considerations. At present, numerous types of competition exist within DoD. In this study, we examine each type of competition undertaken by DoD, including those used for awarding development, production, and support contracts for weapons systems. We believe competition must be maximized during all phases of acquisition. We make recommendations fully understanding that barriers such as the national security environment, the consolidation of the Defense Industrial Base, and restrictions on globalized practices must be addressed. Specific competitive practices should be used for both systems and services. As DoD seeks to transform for challenges of the twenty-first century, it must rely upon competition to be the cornerstone of its acquisition strategy.