Impact of Contract Bundling and Consolidation on Defense Acquisition System and Defense Industrial Base: The Case of the U.S. Department of the Navy

Abstract

Despite Congressional and Presidential emphasis on reducing bundling and consolidation of defense contracts, recent research studies cast doubt on whether bundling and consolidation are problems for small defense contractors or for the defense acquisition system as a whole. On the contrary, those studies proposed that bundling and consolidation ought to be validated as legitimate tools to achieve best value for defense buyers. This paper tests these propositions by examining U.S. Department of the Navy (DON) bundled and consolidated contracts for FY2010, the record year for bundling and consolidation in U.S. defense contracting. Specifically, the paper examines the effect of bundling and consolidation on performance of Navy and Marine Corps buying commands in meeting small business goals, as well as on good-government policy objectives such as competition, performance-based acquisition, preference for commercial suppliers, and support for the U.S. defense industrial base. The paper concludes by recommending the Secretary of the Navy’s Office of Small Business Program (SECNAV OSBP) seven new strategies for challenging bundling and consolidation. Such strategies will enable SECNAV OSBP to improve not only DON performance on small business goals, but also the defense acquisition system as a whole.