Spring 2006 Course Description

Policy Research Project

Section Title: Changing Modes of Defense Procurement: Implications for Pricing and Innovation in the US Defense Industry
Instructor(s): Kenneth Flamm
Course: P A 682B - Policy Research Project
Unique Number: 62405
Day & Time: Tuesdays, 2:00 PM - 5:00 PM
Room: SRH 3.102
Waitlist Information:For LBJ Students: UT Waitlist Information

This course fulfills requirements for the following specialization(s):

Description: In the 1990s, significant declines in defense procurement spending were accompanied by a sharp decline in the number of firms supplying systems to DoD. In military fixed-wing aircraft, for example, the number of prime contractors declined from 8 to 3. Today, procurement spending is projected to rise to levels approaching Cold War peaks over the next decade, but there are no signs that the number of prime contractors will also increase. How will the Defense Department spend these increasing budgets in a cost effective and efficient manner, using a smaller and more concentrated industrial base?

One approach has been to evaluate more flexible procurement methods. An increasing share of procurement in recent years has been going to contracts signed after some form of competition (as opposed to sole source procurements). DoD has also been experimenting with naming a ?lead systems integrator? to oversee major systems procurements, with this systems integrator coordinating and influencing the overall procurement process, and in some respects performing elements of the traditional oversight role of acquisition personnel within the Department. So-called ?other transaction authority,? primarily used in prior periods for R&D-related acquisition by DARPA, is the basis for these acquisitions, rather than normal procurement contracts.

This study will analyze shifts in procurement mechanisms utilized within DoD, their relationship to changing competitive conditions in the defense industry, and impacts on pricing and innovation in defense systems. Using publicly available historical data on defense contracts and procurement, the distribution of contracts by degree of competition, by major category of defense system, by major defense contractors will be analyzed and tracked over time. Trends in the types of contract mechanisms, and degree of competition, for different types of defense systems will be identified. An electronic database showing trends in contracting mechanisms and competition, by types of major defense systems, will be constructed and delivered to the Congressional Research Service as part of this project. Implications for defense procurement policy will be examined.

Return to Spring 2006 Course Schedule