Subcontract Competition – Is it Real?

Abstract

This research looks at how the rates of competition at the subcontractor level compare to commercial norms across a wide data set. A quantitative analysis of a large number of commercial parts (~5M) compare to a statistically similar number of parts from the DoD will be conducted to compare how frequently items are single or sole sourced in each space. The findings will help assess whether the rate of subcontract competition is similar or dissimilar and the degree to which acquisition strategies may need to be adjusted to account for those differences. Then, a qualitative study will be performed assessing the differences and similarities in the data. Generally, acquisition in the DoD leans heavily on competition to drive improvements to cost, schedule, and performance. GAO reports (https://www.gao.gov/products/gao-15-484r), reports by the DoD (https://media.defense.gov/2022/Feb/15/2002939087/-1/-1/1/STATE-OF-COMPETITION-WITHIN-THE-DEFENSE-INDUSTRIAL-BASE.PDF) and from news outlets (https://www.defensenews.com/pentagon/2022/04/12/kathleen-hicks-warns-of-substantial-decline-in-defense-industrial-base-competition/) have all pointed to reduction in competition in the defense industrial base. These sources look primarily to competition at the prime contract level and with very large subcontracts that trigger reporting requirements. Currently, the Competition in Contracting Act (CICA), signed into law in 1984, is the driving force behind using competition as a driver for fair prices in Government acquisition. In that same year, "The Japanese Way" (https://hbr.org/1984/07/simple-truths-of-japanese-manufacturing) was brought into mainstream manufacturing in the US and management practices that encouraged lean manufacturing and closer relationships with single and sole source vendors. The qualitative analysis of the results will be used to assess the business and vendor management strategies deployed by both commercial and defense acquisition personnel with a focus on enriching a more sophisticated understanding of both competition and collaboration within the vendor base.