Procurement: March 13, 2003

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In the last decade, the U.S. Department of Defense has been encouraging finding and buying innovative new equipment and weapons. But most such new items will replace an existing (and much more expensive) item from a long established supplier. Because the number of major suppliers has shrunk since the end of the Cold War, these large companies, each doing billions of dollars in military business each year, are very eager to stamp out competition from smaller upstart companies. This is usually done with lobbyists (to convince the Pentagon that the new stuff sucks) and publicists (to spread rumors to convince everyone that the new stuff sucks.) Another technique is to encourage more rules and regulations for defense contractors, because, historically, all this red tape has been the biggest turn off for new suppliers. But the Pentagon, looking at where the hot-new-ideas (the ones that work, at least) have come from, have concluded that in the future, over half the hot-new-ideas (35 percent from U.S. firms, 18 percent from foreign ones) are going to come from outside the usual group of suppliers. Many of the innovative U.S. companies are smaller companies that often just ignore military sales, feeling that the red tape and other hassles make it more profitable to just stick with the civilian market. Foreign companies have an additional problem, in that the hacks and arm-twisters working for the traditional suppliers will make a lot of noise about how important it is to "buy American." None of this anti-competitive activity is illegal, but it does make the armed forces less effective and it's another of those peace-time conflicts that take place out of sight. One usually never finds out one of these battles has been fought, much less won or lost, until there's a military disaster and some intrepid reporter digs up the reason why the good stuff was not bought, and the over-priced crud was. 

 


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