Aircraft Co-Production and Procurement Strategy.

An analysis of the coproduction in 1955-1964 of four U.S. military aircraft--the T-33A, P2V-7, F-86F, and F-104J--by Japanese firms. The process of transferring the required manufacturing technology is examined. For the F-104J the costs of transfer are also analyzed. These costs were lower than expected--sufficiently so that, when combined with Japan's labor-cost advantage, the Japanese-built F-104Js cost at least 10 percent less than Lockheed's likely selling price. Coproduction's aid to the development of Japan's aviation industry and to making the acquisition of military aircraft politically feasible has important implications for foreign aid policy. Coproduction also suggests that conventional views about the costs and benefits of reprocuring weapon systems only from the developer may be erroneous. A policy of separating programs for contracting purposes could greatly expand the role of competition and reliance on market-generated prices in weapon system procurement. The benefits of such a policy could be substantial. 234 pp. Ref.