Commercial Best Practices in Contracting for Knowledge-Based and Equipment-Related Services
Abstract
The Office of Defense Procurement and Acquisition Policy, Services Acquisition asked the Institute for Defense Analyses (IDA) to evaluate private sector service contracting practices in the areas of Knowledge-Based Services (KBS) and Equipment-Related Services (ERS). IDA performed a literature review and interviewed commercial companies. The literature review highlighted key factors in a company's decisions about outsourcing KBS or ERS: closeness to core competencies and competitive advantages; capability; capacity; and cost, including both production and transaction costs. These key factors map to three strategic outcomes that drive decisions to use external service providers: enhancing competitiveness, reducing costs, and adjusting to rapid change. A key notion from the literature is the centrality of the definition and assessment of core competencies to decisions regarding whether to perform a service internally or outsource. In general, companies maintain core-competencies in-house, as they are often the foundation of their competitive advantage. However, IDA's research revealed circumstances where companies engage with external vendors in areas close to their core. Our findings on commercial best practices are organized in terms of the three strategic outcomes and detailed in the paper.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 2015
- Accession Number
- AD1015369
Entities
People
- Brandon A. Shapiro
- Caroline R. Earle
- Julie C. Kelly
- Michael J. Lippitz
- Richard H. Van Atta
Organizations
- Institute for Defense Analyses