Competition is vital to industry innovation and DIB growth

Gaining Leverage over Vendor Lock to Improve Acquisition Performance and Cost Efficiencies; The MITRE Corporation; https://www.mitre.org/sites/default/files/publications/gaining-leverage-over-vendor-lock-14-1262.pdf

The value of competition has been incorporated into every major piece of Federal legislation on acquisition reform and is continually touted in political speeches and public engagements. The Department of Defense (DoD) strives to foster competition; however, like many Government agencies, the DoD tends to view competition as an activity that occurs only during the initial contracting process, rather than as a dynamic tool for achieving success over the life of a program. Most DoD programs today award development and production contracts to a single prime contractor or contractor team. Using this single-provider approach, the DoD fails to maintain continuous lifecycle competition—the use of competition to motivate contractor performance throughout the life of a program. As a result, too many DoD acquisition programs fail to achieve their cost, schedule, and performance objectives. Competition is an extremely strong motivator: the forces of competition act as an “invisible hand” to self-regulate contractor performance. Contractors tend to keep each other in check, and the Government greatly benefits from, and is protected by, the nature of competition. Extensive historic data on DoD programs has shown that costs consistently decline in a competitive environment, while performance and reliability increase. A 2001 study by the RAND6 Corporation showed that the introduction of a second source during the production of the Tomahawk missile led to estimated savings of $630 million, while improving the missile’s reliability from approximately 80% to 97%. The same study also revealed that the ten DoD aircraft programs that involved no competition during the production phase experienced an average 46% increase in cost over the original budget. (CSIS)7 By contrast, a single-provider environment produces smaller performance improvements, longer schedules, and higher costs. Schedule delays and cost overruns consume significant resources; for example, a 2011 study by the Center for Strategic and International Studies found that 32% of the single-award contracts let after full and open competition with multiple vendors experienced overruns, at a net cost to the Government of $19 billion over the life of the program. Since programs experience fewer overruns and delays in a continuous competition environment, the DoD can invest less time and money overall in managing its programs. Avoiding and breaking vendor lock can be accomplished by creating an environment of continuous competition in both development and production. This paper addresses several techniques to keep a second or third vendor in the game by offering shared contract dollars to pursue alternative technologies, and shared contract quantities to maintain a production capability at low levels. As a result, the single vendor does not have a lock on the business or technology.