Price Analysis and the Effects of Competition.
Abstract
This paper reports on the literature review portion of an ongoing study of competition in defense procurement. The literature under consideration is drawn from two sources: papers written under contract for various agencies within the Department of Defense and papers written by Defense Department employees. These papers are retrospective evaluations of the effects of competition on the costs of weapons programs already completed. The remainder of this paper is divided into three parts. The first part will present the commonly accepted model used to evaluate competition. The second part will discuss the data and results presented in the literature. The final section of the paper will present some tentative conclusions on the adequacy of the model as both a retrospective and prospective tool for analyzing the effects of competition. Most analyses of the effects of competition focus on how competition will change the costs directly related to production. These costs are called recurring costs and include items such as materials and manufacturing labor. From the government's point of view the recurring cost, as used in competition analysis, is the unit price the government pays for a weapon system. The focus on unit price arises from the fact that competitive savings, if they exist, result from reductions in unit prices over the life of the system. Virtually all of the unit price models that have been used to analyze the effects of competition are based on the learning curve paradigm.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 1985
- Accession Number
- ADA161145
Entities
People
- J. Jondrow
- R. Berg
- R. Dennis
Organizations
- Center for Naval Analyses