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The U.S. Navy wants two competing teams to develop different designs for the Littoral Combat Ship (LCS), a small surface vessel that can counter asymmetric threats close to shore. The winning team will build 10 boats before the Navy selects a second source to build 5 more. Proponents of this "split buy" strategy credit contractor price cuts and the promise of greater operational versatility. Why buy a fleet with just one design?
"If the new approach is such a smart idea," asks Loren B. Thompson of the Lexington Institute, "then doesn't that bolster the case for a split buy of other military systems, like fighter engines or aerial refueling tankers?" Thompson answers his own question by countering the case for "competition". Ultimately, he argues, there won't be enough cost savings in the Navy's new approach to "cover the bill" for two different production lines and two different maintenance systems.
The military marketplace is different, he adds, in that there's only one customer – the U.S. government – to cover all supplier costs. Does "split buy" procurement ever make sense?
Source: Defense Update
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