High costs, lengthy delays, and poor quality in U.S. major weapon systems procurements have prompted repeated calls for reform in defense acquisition procedures. A leading theme of these calls for reform has been for an increased use of competitive procurement practices. 1 In practice, competition in major weapon systems procurements has come to mean the potential use of a second producer at some stage of the procurement. Dual sourcing and second sourcing are two options that are frequently employed. Simultaneous production from two sources is dual sourcing. One firm may develop the technology and engage in initial production. The technology is then transferred to a second firm, perhaps originally via a relatively high cost 'learning buy.' Production awards are then split between the two buyers, with the majority of production awarded to the firm that was judged to be superior (generally, the lower cost producer) in the previous award. The additional costs of dual sourcing are the second set of fixed costs, technology transfer costs, and reduced movement down the producers' learning curves. The benefits are in terms of improved incentives to reduce costs and increase quality on the part of the producers. Second sourcing involves a technology transfer in the same manner as dual sourcing, but all future production is then awarded to one of the two firms in a one time bidding contest. The competitive bid should reduce the price that the DoD pays for production, relative to a negotiated price in a sole-source environment. Many studies have attempted to determine the savings (in terms of price decreases) from second or dual sourcing. Such competitive practices appear to lower prices, but whether they are cost-effective when additional capital costs are included is uncertain. 2 The surveys and critiques provided by Anton and Yao (1990) and Pilling (1989) however, suggest that methodological difficulties limit the usefulness of these studies.