Author:
Kapstein Ethan B.,Oudot Jean-Michel
Abstract
Is it possible to generate more efficient outcomes with respect to public procurement in general and defense acquisition in particular? Or are cost overruns inevitable when it comes to major engineering projects, like the development of modern weaponry? In this article, we draw on a unique data set of nearly 50 French armaments contracts in order to examine how one government has reformed its defense acquisition process over the past twenty years. Beginning in the early 1990s, France embarked on a series of policy reforms that enabled the state to contain skyrocketing weapons costs. We emphasize three, inter-related aspects of the defense acquisition environment in France that favored cost containment: first, hard budget constraints; second, the great technical capacity that the French government brought to bear on the weapons acquisition process, coupled with its iterative relationship with a small number of suppliers; and third, the use of contracting techniques that empowered project managers.
Publisher
Cambridge University Press (CUP)
Subject
Political Science and International Relations,Industrial relations
Reference64 articles.
1. On cost overruns, see Government Accountability Office (06-409T). As we will discuss below, the level of “average” cost overruns depends on how the “average” is defined and calculated. In particular, the arithmetic average —which the GAO seems to use— does not take into account the effects of contract size; as a consequence, we look at both the arithmetic and geometric averages in our account of the French case, and thus the spread in averages from 5-10 percent.
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5. Besfamille Martin and Lockwood Ben 2004. Are Hard Budget Constraints for Sub-National Governments Always Efficient? Warwick Economic Research Papers n° 717.
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