Efficient aquisition. Develop, adapt or buy off-the-shelf?
Publish date: 2016-05-26
Report number: FOI-R--4265--SE
Pages: 52
Written in: Swedish
Keywords:
- Defence equipment
- equipment acquisition
- forms of acquisition
- off-the-shelf
- adaptation
- development
- essential security interests
- iterative requirement adjustment
Abstract
This report is the result of a cooperation with FOI's sister organization in Norway, the Defence Research Institute, FFI. In this stage of the cooperation has focused on different forms of defence acquisition. In both countries there have been political signals to increase the procurement of products available on the market, or off-the-shelf. For Sweden's part it is expressed in the Swedish Defence Bills from 2009 and 2015 that available off-the-shelf solutions shall take precedence over domestically developed products when acquiring new defence equipment. In our review of theory and previous empirical studies on forms of acquisition it turned out that there are no consistent definitions of or delimitations between off-the-shelf, adapted or developed products. As a consequence we have defined our own theoretical framework which is operationalized in a simplified classification method. In the part of our quantitative study we investigate the prevalence of different forms of acquisition, by comparing different defence branches as well as Sweden and Norway. The quantitative study shows that the Navy and Airforce acquires more developed products than Army and Logistics branches. Sweden generally acquires a larger share of developed products than Norway. To investigate the reasons behind the choice of various forms of acquisition we also conducted a qualitative case study. Both the Swedish and the Norwegian cases show that limited time often is a reason for choosing off-the-shelf solutions, while legacy from existing equipment and specific requirement often lead to adaptation and development. Political priorities also contribute to the choice of adaptation and development. This can for instance be an issue of industrial politics, counter purchases or a political ambition to participate in international cooperation. Lastly we discuss the scope of any potential savings which could be when shifting from adapted and developed to off-the-shelf products. Given that the costumer is willing to accept the adjusted requirement this likely means and decision makers are willing to relinquish some political priorities which lead to development projects, there is a potential to increase the purchase of off-the-shelf products to about one billion SEK. This would, according to our estimates lead to a savings potential of about 200 million SEK per annum.