Dual Production Sources in the Procurement of Weapon Systems: A Policy Analysis

Provides a framework to guide decisionmakers involved with the weapon systems acquisition process in determining whether to establish dual production sources. In a dual source competition, annual production quantities would be divided such that the low bidder would receive the larger share. The framework identifies alternative approaches for establishing second sources and implementing dual source competition, provides a methodology for estimating costs associated with such approaches, reviews relevant microeconomic theories and previous related systems, analyzes data on competition in the acquisition of weapon systems, and identifies risks which dual sources might affect and assesses their significance. The analysis finds that, when applied selectively, the establishment of second sources and the implementation of dual source competition may be effective in lowering procurement costs, in reducing certain risks in sole source production, and in enhancing the industrial mobilization base. However, this is not an effective general policy because costs would normally outweigh benefits.