02706cam a2200409 i 4500001001900000003000500019008004100024010001600065020001500081027001900096035002000115037001100135040001900146043001200165050002100177100003600198245010100234264003700335300004300372336002600415337002600441337002800467338003600495338002700531500002100558504004100579520131100620530005801931588004701989651004602036651005002082700003402132700003002166710002202196856005902218999001902277rnd000000000047791RAND920212s1990    caua     b    000 0 eng d  a   91126826  a0833010972  aRAND/R-3996-RC  a(Sirsi) a189014  c$25.00  aCstmoRcCstmoR  an-us---00aUC263b.B57 19901 aBirkler, J. L.,d1944-eauthor.10aIssues associated with second-source procurement decisions /cJ.L. Birkler, E. Dews, J.P. Large. 1aSanta Monica, CA :bRAND,c1990.  axv, 67 pages :billustrations ;c23 cm  atextbtxt2rdacontent  acomputerbc2rdamedia  aunmediatedbn2rdamedia  aonline resourcebcr2rdacarrier  avolumebnc2rdacarrier  a"December 1990."  aIncludes bibliographical references.  aThe basic argument for competition in Department of Defense (DoD) procurement is that it is believed to reduce the government's cost of purchasing goods and services. Nonetheless, in some cases it may be actually less costly for the government to forgo competition and rely on a single supplier. The DoD's program manager must determine whether competition is likely to result in savings or losses for the government; if competition is indicated, he must then decide on what specific form it should take. This report focuses on one of the DOD's strategies for establishing competitive production sources--"second-source" procurement, in which two firms produce a single design. Such an arrangement does not meet the requirements of traditional economic theory for the forces of competition to operate with full effectiveness. Only one buyer and only two sellers exist; demand is inelastic but uncertain. The authors describe five methods of estimating single-source cost, analyze the effect of competition, and discuss the breakeven method, which deduces the magnitude of pure savings needed to compensate for the cost to the government of introducing a second source. Finally, they analyze the Tomahawk project as an example of second-source procurement, and consider the quality of the resulting product.  aAlso available on the internet via WWW in PDF format.  aDescription based on print version record. 0aUnited StatesxArmed ForcesxProcurement. 0aUnited StatesxArmed ForcesxWeapons systems.1 aDews, Edmund,d1921-eauthor.1 aLarge, Joseph P.eauthor.2 aRand Corporation.41yOnline Accessuhttp://www.rand.org/pubs/reports/R3996/  c598654d598654