Research for Acquisition

We review several innovative commercial and Navy acquisition practices introduced mainly during the 1990s. The first group of practices is associated with greater supplier involvement over the product lifecycle (such as maintenance of retail stock, third-party logistics, bundling of maintenance with equipment, leasing, and purchasing equipment services rather than the equipment). A second group of practices entails changes in the nature of the buyer-supplier relationship (such as partnering and long-term contracting, allocating intellectual property rights, and greater reliance on incentives). For each acquisition practice, we document examples of its application in both commercial and Navy contexts. We conclude that the first group of practices would be more likely to benefit the Navy if the Navy’s purchases constitute a small share of the total market for the good or service. The benefits from the second group of practices, on the other hand, can be derived even when the Navy is a large buyer relative to the total market. These latter practices could be applied more widely.