Services Supply Chain in the Department of Defense: Drivers of Success in Services Acquisition

Abstract

Over the last few decades, services acquisition has continued to increase in scope and dollars obligated. Contracting for services has grown in relation to systems contracting over the last couple of decades and is the fastest growing procurement sector for the DoD. This growth in dollars obligated has attracted increased political attention and scrutiny on an already problematic defense contracting process. The DoD has responded to these problems by improving services acquisition in several different ways, but even with these improvements, services acquisition still has problems in the areas of procurement planning, source selection, and contract administration. This research continues our ongoing investigation in DoD services acquisition by exploring the determinants of contract success. We use the DoD Contractor Performance Assessment Reporting System (CPARS) as a proxy for contract success and determine if there are any relationships between contract variables (type of service, contract dollar value, level of competition, contract type) and contract success based on CPARS ratings (quality of product/service, schedule, cost control, business relations, management of key personnel, and utilization of small business). Our research findings revealed that contract dollar value and level of competition affected the success of a service contract. The findings also revealed that the failure rate in CPARS was lower than expected. Finally, we saw that as the percentage of 1102 filled billets increased, the contract failure rate decreased. We also observed that as workload dollars per filled billet increased, contractor performance ratings also increased, and thus contract failure ratings decreased. From these findings, we present a discussion of the results and the managerial implications.