Exploring Service Innovations in Performance Based Contracts in the Swedish Defence Sector: A Case Study of SK 60 Trainer

Abstract

This study takes its starting point in the restructuring of Swedish defence and broadens the view of innovation as a result of new types of partnering arrangements. In Sweden, innovation has played an important role in the development of submarines, aircraft, and other types of military capabilities. The focus has primarily been on technological innovation, but the authors argue that innovation within the defence sector not only requires an ability to address technological innovation, but also needs to embrace all other forms of innovation. This narrow view of innovation seems to be global. Traditional defence acquisition has established complex regulations, managerial practices, and organizational structures, which might hinder innovation. However, new forms of contracts, such as performance based contracting and contracting for availability, seem to offer new opportunities in terms of ways for private firms to package and deliver military capabilities to the armed forces. This paper aims to explore the understanding of service innovation in complex defence acquisition projects. The theory is applied to the Swedish defence sector and the frame of reference has emerged through a literature review within the field of PBC and service. The article concludes by presenting insights from a longitudinal qualitative case study, that is, the outsourcing of the SK 60 trainer aircraft, used for training fighter pilots who reflect phases such as concept development transition and service support. The paper evaluates the motivation behind military innovation and what it is important to look at within processes, rules, and norms of the defence acquisition system and interaction within the defence establishment. Previous studies have not explicitly considered service innovation within the defence and security industry.