Competitive Weapon Systems Acquisition: Myths and Facts

After all the publicity about defense procurement scandals, the Administration, Congress, and the public have been pushing to open defense acquisition to more competition. Congress enacted The Competition in Contracting Act of 1984. This report attempts to separate the myths from the facts of weapon system competition. It is unfortunate that many policy analyses, and many major acquisition decisions, were based on the myth that competing weapon systems should produce significant savings to the government. The fact is that dual source competition in major systems has resulted in additional costs to the government almost as often as it has produced savings. Theoretical explanations and empirical evidence are presented to shed some light on this major policy issue. This report summarizes the salient findings from a series of competition- related studies which we conducted for the Naval Air Systems Command Cost Analysis Division. We found a common thread in these studies which has implications for major systems acquisition policy making and the direction of future competition-related policy studies.