Price-Based Acquisitions: Effectively Transitioning to More Business Oriented Commercial Practices

Commercializing and reforming the Department of Defense (DOD) acquisition process is paramount to preserving the national security of the United States. A healthy and competitive U.S. Defense Industry lends itself to a well-equipped and capable combat force. Despite current budgetary increases and a focused emphasis on readiness, the U.S. military recently experienced a "13- year-long trend of real defense spending decline," marking "a 38 percent real reduction in spending from defense budgets in the mid-1980s". The real dollar budgetary decline and a push for quicker deployment of cutting edge technology highlight the need for a more efficient and effective DoD acquisition system; However, critical, high-value, military specific, sole-source procurements are often negotiated as cost-based contracts. In order to adapt to a changing defense environment, the DoD has explored alternative contracting processes such as Price-Based Acquisition (PBA), wherein "price" is established on a variety of flexible conditions. Regulatory, cultural and structural challenges confront the DoD in its efforts to attract non-traditional defense contractors to the prospect of conducting business with the DoD through processes such as PBA. As is such, this analysis presents major findings and puts forth recommendations with respect to the regulatory, cultural and structural challenges facing the DoD in its efforts to attract non-traditional research and development/high-tech applications.