Issues associated with second-source procurement decisions

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March 20, 2025 | History

Issues associated with second-source procurement decisions

The basic argument for competition in Department of Defense (DoD) procurement is that it is believed to reduce the government's cost of purchasing goods and services. Nonetheless, in some cases it may be actually less costly for the government to forgo competition and rely on a single supplier. The DoD's program manager must determine whether competition is likely to result in savings or losses for the government; if competition is indicated, he must then decide on what specific form it should take. This report focuses on one of the DOD's strategies for establishing competitive production sources--"second-source" procurement, in which two firms produce a single design. Such an arrangement does not meet the requirements of traditional economic theory for the forces of competition to operate with full effectiveness. Only one buyer and only two sellers exist; demand is inelastic but uncertain. The authors describe five methods of estimating single-source cost, analyze the effect of competition, and discuss the breakeven method, which deduces the magnitude of pure savings needed to compensate for the cost to the government of introducing a second source. Finally, they analyze the Tomahawk project as an example of second-source procurement, and consider the quality of the resulting product.

Publish Date
Publisher
Rand
Language
English
Pages
67

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Book Details


Edition Notes

Includes bibliographical references.
"R-3996-RC."
December 1990.

Published in
Santa Monica, CA

Classifications

Library of Congress
UC263 .B57 1990, AS36.R3 R3996

The Physical Object

Pagination
xv, 67 p. :
Number of pages
67

Edition Identifiers

Open Library
OL1594915M
ISBN 10
0833010972
LCCN
91126826
OCLC/WorldCat
23720101
Goodreads
4557704

Work Identifiers

Work ID
OL1814126W

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March 20, 2025 Edited by MARC Bot import existing book
April 28, 2010 Edited by Open Library Bot Linked existing covers to the work.
February 1, 2010 Edited by WorkBot add more information to works
December 9, 2009 Created by WorkBot add works page