Competition and Bidding Data as an Indicator of the Health of the U.S. Defense Industrial Base

Abstract

This research focuses on the generation of a predictive model for effective competition rates within defense contracting at the levels of Major Contracting Commands (MCCs) and U.S. states (as place of performance). The purpose of the model is to better understand the extent to which different factors in defense contracting influence effective competition in the bidding process. By comparing the model's prediction of how different factors influence achieving effective competition, the model can then be used to identify possible weaknesses in DoD contracting and in the industrial base. The research finds that effective competition rates have held steady in aggregate despite the pressures of sequestration, but that those rates differ significantly between major DoD components. In particular, there are notable differences between the major DoD components in rates of effective competition for similar categories of products, services, and R&D. This research first examines trends in competition for defense contracts for DoD overall, by major DoD component, and by various taxonomies of what DoD contracts for. It then examines the relationship between a variety of contract characteristics and the level of competition through the number of offers, at both the state and MCC levels. A number of variables are identified that might correlate with higher or lower levels of effective competition: Contracting Methods, Product or Service Categories and Platform Portfolios. The research concludes that there are major discrepancies in rates of effective competition within different categories of the DoD contracting portfolio between states and between MCCs that warrant further analysis to determine whether the difference is the result of practices that can either serve as lessons learned or possible areas for improvement.