Price Based Acquistion:Issues & Challenges for Defense

This document reports our research findings on the use and potential benefits of Price Based Acquisition (PBA) for Department of Defense (DoD) procurement of major military-unique systems. PBA is a major acquisition reform measure which seeks to reduce costs and enhance acquisition efficiency through the more commercial-like procurement of defense systems. The core concept of PBA is procurement of goods and services through a commercial-like market pricing approach rather than through a heavily regulated cost-based traditional DoD approach using certified cost or pricing data. Our research findings are based on extensive structured interviews with government cost estimators, contracting officers, and other senior acquisition officials representing all four major Air Force product centers as well as other stake holders, and numerous private sector officials representing defense contractors involved in major PBA-like programs. We also reviewed more than thirty case studies of programs with important PBA-like features.PBA is a broad and often misunderstood concept. One of the key aspects of our research was to develop a systematic taxonomy of PBA-like approaches used by DoD. This taxonomy was used to organize our assessment of the case studies, and help integrate the findings from our structured interviews.RAND Corporation is the author of 'Price Based Acquistion:Issues & Challenges for Defense', published 2005 under ISBN 9780833037886 and ISBN 0833037889.