An analysis of quantity-split and nonrecurring costs under competitive procurement environment. Volume 1
Boger, Dan C.
Liao, Shu S.
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This study addresses two important issues related to establishing a second source and managing a program under dual source competition. The first relates to the issue of estimating nonrecurring costs. The second relates to the issue of dual award quantity-split in order to maintain a competitive environment. In dual sourcing decisions, it is necessary that the nature and extent of prospective second source's nonrecurring costs be fully analyzed. Nonrecurring costs are important since they represent those investment costs which must be incurred before the second source produces any output. Several nonrecurring cost estimation models, both parametric and nonparametric, are examined. Five different quantity-split models are analyzed to evaluate each model's strength and weakness in cost performance and its ability to cope with contractor gamesmanship
NPS Report NumberNPS-54-85-08
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