Determining and Forecasting Savings from Competing Previously Sole Source/Noncompetitive Contracts
Abstract
The Department of Defense has had no firm basis for deciding when to introduce competition, or if competition should be introduced. When the value of competition cannot be measured with a reasonable degree of confidence, defense of budgetary estimates and the development of a acquisition strategy is difficult, if not impossible. The approach taken in this study included a thorough investigation of the procurement histories of sixteen items originally produced on a sole source basis and later competed; the identification and analysis of factors explaining savings due to competition, and the synthesis of these factors into workable methodologies for estimating net savings on historical systems and forecasting expected savings for future systems. A data base is developed. The authors conclude that the savings achieved by introducing competition into the production of weapons systems can be reasonably estimated. Of the sixteen items analyzed, five showed a loss due to competition. Savings for the sixteen items averaged 10.8%. The forecasted savings methodology (FSM), which was developed from the analysis of the sixteen systems, is a useful tool which provides an estimate of the expected savings, or loss, from introducing competition as well as an analysis of the qualitative factors influencing competition.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 1978
- Accession Number
- ADA064168
Entities
People
- Edward T. Lovett
- Monte G. Norton