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Reforming Defense Procurement: Lessons from France

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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.

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... How do we get from where we are -a source-selection process dominated by habits of secrecy, autarky, and opportunism -to one based on collaboration, learning, and shared problem solving (Franck, Lewis, & Udis, 2008;Kapstein & Oudot, 2009;Elliott & Johnson, 2011)? The answer to this question lies in building and sustaining presumptive trust among the government-business participants in the source-selection process. ...
... , although practitioners evidently improvise similar arrangements on a regular basis Werner & Hefetz, 2008;Kapstein & Oudot, 2009). Snider, K., & Walkner, M. (2001). ...
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... How do we get from where we are -a source-selection process dominated by habits of secrecy, autarky, and opportunism -to one based on collaboration, learning, and shared problem solving (Franck, Lewis &Udis 2008 Kapstein andOudot 2009;Elliott & Johnson forthcoming)? The answer to this question lies in building and sustaining presumptive trust among the government-business participants in the source-selection process. ...
... Another responsibility of associations would be to socialize newcomers to the acquisition 14 One of the intriguing aspects of cultivational governance is the way it combines competition with close working relationships. Most scholars have treated these as either/or propositions (Williamson 1985;Thompson 1993;Brown, Potoski & Van Slyke 2006), although practitioners evidently improvise similar arrangements on a regular basis (Romzek & Johnston 2005;Werner & Hefetz 2008;Kapstein & Oudot 2009). enterprise and to a system of rules that would create and sustain collective expertise and motivation. ...
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... Public-private interactions combining disperse capabilities has also been observed in French defense contracts, with indications that it diminishes negative externalities through reduced information asymmetries and cost overruns (Kapstein & Oudot, 2009). In Germany, evidence shows that opportunistic behavior from outside suppliers in the defense industry decreases when the rate of renegotiations increases because private partners have an interest in building a positive reputation of cooperative behavior (Lohmann & Rötzel, 2014). ...
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... Public-private interactions combining disperse capabilities has also been observed in French defense contracts, with indications that it diminishes negative externalities through reduced information asymmetries and cost overruns (Kapstein & Oudot, 2009). In Germany, evidence shows that opportunistic behavior from outside suppliers in the defense industry decreases when the rate of renegotiations increases because private partners have an interest in building a positive reputation of cooperative behavior (Lohmann & Rötzel, 2014). ...
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... In the short meantime, only a minority of EU members underwent significant reforms of their industrial policies and, by themselves, these reforms hardly made EU secondary legislation inevitable (e.g. Kapstein and Oudot 2009;UK Government 2005a). Similarly, although some governing parties were replaced during this period (e.g. in Poland), one could not observe any systematic shift towards more liberal-oriented EU governments. ...
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