efence procurement is an important current policy issue in Australia. On one hand, there is a build-up in defence outlays as a result of the war on terrorism, our military’s involvement in peace missions in our region and beyond, and changes in the threats facing Australia. Given the extra resources directed to defence, it is natural to expect that these expenses will be subjected to a greater degree of scrutiny. On the other hand, greater public scrutiny also follows from a history of major delays and cost overruns in the Collins Class submarines and the Jindalee Operational Radar Network projects. A recent media report (see http://www.abc.net.au/news/newsitems/s1058425.htm) cites the findings of a review of the Government’s defence equipment projects by the Australian Strategic Policy Institute indicating a multi-billion dollar blow out in the cost of new defence equipment. According to the media report, the costs of the Air Warfare Destroyers have doubled while the costs of the upgrade of the Chinook helicopter have more than tripled. In this paper we are concerned with the procurement of complex weapons systems. We review the major characteristics of the weapons systems acquisition process that distinguish this process from a standard regulation problem. We then discuss some of the outcomes of the acquisition process and focus on the relevance of the economic theory developed over the last twenty-five years for creating remedies to mitigate the intrinsic inefficiencies in the weapons systems acquisition process. Specifically, a weapons system is defined as a composite of equipment employed as an entity to accomplish a military mission (such as destroying enemy installations, identifying hostile aircraft, protecting advancing infantry or surveying territory). Complex weapons systems, such as those associated with fighter aircraft and bombers, frigates and submarines, tanks and armoured personnel carriers, account for a high share of defence outlays in the more advanced economies. The process of acquiring complex weapons systems encompasses their conception, development and production. In this paper we focus on the efficiency of the acquisition process. Efficiency in this context involves organising the process of acquiring each of those systems in a manner likely to maximise the systems’ net value.