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Abstract
An examination of buying practices in the United States Department of Defense, the largest buying organization in the world, provides an opportunity to study competition in the military marketplace and determine if the findings are consistent with claims made in academic literature about competition in contracting. Many academics and other experts advocate the use of a market model to privatize goods and services, and attribute lower prices and increased efficiency to the operation of competition in the marketplace. Since there is no existing, mature model available to conduct a study of the effects of competition upon the defense marketplace, the first task is to develop one. The model in this study is specified with a competition variable, number of offers, as the dependent variable and contract size, contract type, industry, and statutory exemptions to competition as the independent variables. The results of the analysis reveal that relationships exist between the dependent and independent variables and that the differences in competitive behavior across industries are important. While facilitating a defensible answer to the research questions in this study, the analytical approach does not provide extensive explanations of the results. Descriptive data are used to analyze study results within four frameworks economic, management, legitimacy, and political and provide reasonable explanations for the results of the bivariate analysis. Finally, the results of the analyses are discussed in relation to theories that are connected with privatization such as microeconomic theory, Public Choice Theory, Transaction Cost Theory, Public Management Theory, and quasi-market theory. The approach in this study tells two tales what theory says will occur and what really happens in the Department of Defense marketplace.