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Buying in a Businesslike Fashion— And Paying More?[Note 1. The views expressed in this paper are those of ...]
Author(s) -
Besselman Joseph,
Arora Ashish,
Larkey Patrick
Publication year - 2000
Publication title -
public administration review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.721
H-Index - 139
eISSN - 1540-6210
pISSN - 0033-3352
DOI - 10.1111/0033-3352.00105
Subject(s) - purchasing , business , negotiation , government (linguistics) , marketing , activity based costing , exploit , commerce , computer security , computer science , linguistics , philosophy , political science , law
The government, particularly the Department of Defense (DoD), is undergoing yet another wave of acquisition reforms, which are intended to bring commercial buying practices to DoD's purchasing operations. This research shows that, prior to these reforms, the DoD's buying practices were superior to commercial practices in terms of prices paid for a large number of electronic and engine parts. The research compares DoD and purchasing of more than 676,000 identical items costing more than $60 million with commercial purchasing of the identical items. It finds that the DoD's purchasing superiority holds even when purchasing costs are considered. The DoD achieved these results because it was already using commercial practices commonly followed by large firms: aggregating purchases, using cost data, and negotiating aggressively in markets with few suppliers. Some of the recent reforms will undermine the DoD's ability to exploit these common commercial practices and will raise the government's costs.