Statistical Methods in Sole Source Contract Negotiation.
CLEMSON UNIV S C DEPT OF MATHEMATICAL SCIENCES
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A scenario is described which involves ill-defined elements of conflict and cooperation the acquisition of military systems by the Department of Defense DoD from large corporations. Current practices lead to situations in which DoD must deal with a sole source and thus forego savings which might be realized from competition between contractors. In order to deal with this situation, the Armed Services Procurement Regulations ASPR prescribes procedures which must be employed in the analysis and negotiation of sole source price proposals. These time-consuming procedures generate enormous proposal backlogs for government price analysts who, because of time pressure, may not be able to do a sufficiently thorough and accurate analysis upon which to base their negotiation position. This analysis paralysis also causes payment delays which, in turn, force contractors to borrow working capital and suffer capital costs. It is clearly in the best interests of all parties to expedite the processing of these proposals. This has been accomplished by developing statistical sampling and estimation techniques which, unlike some classical procedures, are not vulnerable to exploitation through the use of clever padding strategies.
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