Benefits of Competitive Bidding on Defense Contracts Extend Far Beyond Saving Dollars

Your May 13 article, “At the Pentagon, Competition Is No Panacea,” raises serious questions concerning the Department of Defense’s use of competition in its acquisition process.

The success of our competitive practices cannot be judged solely on the amount of money saved. Although lower prices are an important goal of competition, other goals include obtaining quality products on schedule, protecting the country’s industrial base (both in a quantitative and a qualitative sense), and--in our capitalistic society--giving more than one company an opportunity to compete.

Hindsight being 20-20, it is not surprising that in some cases actual savings from competition are less than originally estimated. In many cases, however, we have experienced even greater savings than anticipated. Further, in some cases our motivation for competing an acquisition has not been to save money. For example, with the Sparrow missile, we competed to overcome the technical problems and non-responsiveness of the sole-source contractor. Introducing competition led directly to management changes by the original contractor that resulted in a better-quality product.

Although not stated explicitly in your article, implicit in its criticism of dual sourcing is the idea that we would be better off returning to a sole-source environment.

The Defense Department Inspector General’s 1988 audit report on dual sourcing, cited by your reporter, disagreed, stating, “In any analysis the burden should be on those wishing to continue sole-source contracting to clearly demonstrate that sole-source contracting is less costly.”

As I mentioned to (staff writer Ralph) Vartabedian in my interview with him last March, the Navy is sensitive to evaluating our dual-source policy on a program-by-program basis.

When quantities decline to the point where dual sourcing is no longer cost-effective, the Navy will adopt the appropriate cost-effective alternative. Moreover, the dual-source policy is neither the predominant nor the preferred technique to foster competition.

With limited exceptions, contracting officers are required to promote “full and open competition,” that is, ensure that all responsible sources may compete. Whether we achieve competition through two sources or many, the central point remains that competition has demonstrated significant cost savings to the taxpayer with quality products being delivered in a timely manner.

W. H. HAUENSTEIN

Rear Admiral, SC, U.S. Navy

Washington