Competition as an Acquisition Strategy: Impact of Competitive Research and Development on Procurement Costs
INSTITUTE FOR DEFENSE ANALYSES ALEXANDRIA VA
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This study examines the impact of RD prototype competition on subsequent procurement costs for major weapon systems. Four acquisition programs that included prototype competitions are studied in detail, and cost growth data are compared for 14 programs that included prototype competitions and 27 that did not. There is evidence that prototype competition, when properly structured, does lead to lower procurement costs. For three of the four programs studied in detail, cost savings appear to be greater than incremental costs of staging their competitions, on a constant-dollar, discounted basis. The study suggests that prototype competition should be continued in a particular program until the contractors can prudently propose firmly priced production options. Whether or not prototype competition should be initiated for a particular program depends on factors specific to that program.
- Economics and Cost Analysis
- Logistics, Military Facilities and Supplies