Fixed price' versus 'cost plus' Defence contracting (original) (raw)

In Search of Efficient and Effective Defence Procurement: An Australian Case Study

2010

Australia has long sought to improve the efficiency and effectiveness of procurement for national defence through refined institutional arrangements and increasingly professional acquisition personnel. The Defence Materiel Organisation (DMO) is the dedicated, semidetached procurement arm of the Australian Defence Organisation (ADO). Recent reviews of defence procurement function called for greater commercial orientation of the DMO and employment of exprivate sector staff to make its operations more business-like. In this paper, we use an analytic framework adapted from Hart et al (1997) to compare and contrast the conventional, in-house procurement agency with a more commercially-oriented defence procurement agency broadly modelled on the DMO. We argue that the relative efficiency of these two stylized arrangements depends on how procurement function is integrated into the governance structure of the ADO and, in particular, on how different incentive regimes are applied to motivate ...

The application of transaction cost economics to UK defence acquisition

2011

Major defence projects have a reputation of cost increases, time delays and in some cases not meeting user requirements. The aim of this study was to discover the factors which create the difficulties in UK defence acquisition projects. The dataset used in this research are seventeen, National Audit Office: Value for Money reports of major defence projects. Qualitative Software NVivo 8 was used to organise passages from the reports into categories of factors representing the defence acquisition process. A content analysis method was applied to the categories in order to highlight their quantitative and qualitative significance. A Transaction Cost Economics approach was taken to formulate the research propositions, which were tested using the qualitative content analysis.The fundamental transformation in defence procurement leads to post-contract asset specificity. There is a lack of substitute suppliers in defence procurement due to the high switching costs. There are three reasons ...

Analysis of Defense Products Contract Trends, 1990-2014

2015

: Existing research on defense products contracting shows a marked focus on large and high-profile programs that qualify as Major Defense Acquisition Programs (MDAPs). In an effort to fill a gap in the literature of product contracting, CSIS has launched this study an analysis of trends in DoD products contracting covering all contracting types, key components accounts, and categories of products. Looking at the period from 1990 2014, this report presents initial results and focuses on three notable questions: How have rates of effective competition differed between different categories of products throughout the period? How have the industrial bases for different categories of products changed since 1990? And how did sequestration and its aftermath affect DoD products contracting? Additionally, this report identifies notable data quality issues with both the Federal Procurement Data System and DD350 data to aid future research. The main findings of this initial inquiry are threefol...