Analysis of the Hidden Costs of Competition in the Procurement of Spare Parts atthe Navy Ships Parts Control Center: A Framework for Process Improvement

摘要

The highly publicized spare parts overpricing scandals of the early 1980s set thestage for legislative and Service-driven measures to ensure increased employment of competitive acquisition strategies. This study will show that competition, while producing well advertised successes, has become an end and not a means to improving the acquisition of spare parts and components at the Ships Parts Control Center (SPCC) . The result of this scenario has been numerous, sub-optimal, short term decisions in favor of competitive award and the the consequent accrual of significant hidden costs. This analysis provides background on the pro-competition climate set by the procurement scandals of the 1980s. It then explores the concept of the inherent differences between the commercial and defense markets; illustrating how the intrinsic benefits of competition are often inapplicable at Defense procurement activities such as SPCC. The study then shows how the competitive procurement practices at SPCC are directly opposed to the TQM principles of customer focus, eliminating inappropriate goals and quotas, barriers between departments and awarding contracts primarily on price.