Benefits of Competition
In the article “Why Compete?”(June 2009, p.16) about the Air Force refueling tanker program, the following statement is made: “The benefits of competition are well established: innovation, efficiency, effectiveness, quality and performance. Although competition is frequently implemented in Defense Department programs, its practice is not being maximized.”
The U.S. Navy’s Littoral Combat Ship program is an example of where two independent shipbuilders are competing with each other with different ship designs for the same program. The competing contractors (Lockheed Martin and General Dynamics) stated an estimated unit price for each ship at $220 million. The cost is now in the range of $700 million per ship. The congressional cost cap is $460 million per ship. Therefore, the Navy may not reach its required acquisition goal of 55 littoral combat ships if the price is not lowered. The above attributes of innovation, efficiency, effectiveness, quality, and performance appear not to have manifested themselves up to this point. Although there is competition, the taxpayers have not realized a monetary savings.
The Air Force may have concluded that it is prudent to go with the winner-take-all scenario in the tanker competition between Boeing and Northrop Grumman. In this uncertain budgetary climate, the Air Force believes the argument that two, sole-source, “split buy” awards would not achieve the incentives of competition.
Steven Silverman
Philadelphia, PA
True Cause of Cost Overruns Cost overruns and delays are usually brought about because the government contracts for something it does not fully understand, cannot clearly and precisely articulate its desired capabilities and specifications, and in many cases, is not even technologically feasible. When early technical problems clearly suggest termination, government program managers instead routinely amend the requirements, thus driving up cost while delaying the program. This is almost always done in direct violation of established and already very mind-numbingly detailed acquisition regulations.
Then, in many cases to cover themselves, defense and service level bureaucrats often dream up added regulations and requirements that delay if not outright confuse program development with mindless added bureaucracy.
For a timely example, consider the National Defense June 2009 article on page 20, “Defense Must Measure True Cost of Fuel, Says Acquisition Chief.” It begins, “Weapon buying decisions in the future will take into account how much it will cost to provide fuel for their operations.”
Ashton Carter, undersecretary of defense for acquisition, technology and logistics, wants programs to consider not only fuel cost, but cost of delivering it in dangerous environments, factoring in added transportation and security costs of the fuel convoys, etc. Oh, this is really going to speed things up, won’t it?
Chester A. Kojro
Rolla, MO