Defence acquisition is the process of procuring and contracting for goods and services, including military weapons systems and support facilities, to meet the needs of defence organisations. It is an important part of the defence industry and process includes research and development, funding authorisation, procurement, production, and fielding.
Defence acquisition is an extremely large market, accounting for roughly two-thirds of all global military spending. The industry is estimated to be worth $1 trillion worldwide and is expected to continue growing in the coming years.
The main objective of defence acquisition is to provide a secure environment for a nation by ensuring its defense capabilities are fit for purpose at all times. This can be achieved through effective management of resources, processes and people within a framework that ensures effective governance of all aspects of defence acquisition in accordance with agreed standards and regulations.
Defence acquisitions are highly regulated by governments around the world, who often mandate that certain parts be made in their own countries. However, this has led to a globalised defence industry, where companies operate across borders to produce components for their client's products.
This creates opportunities for companies operating outside of these regulations (i.e., in countries with less stringent regulations), but also poses challenges when it comes to developing new products.
The Defence Acquisition Process
The defence acquisition process (DAP) is a set of actions and interactions between the different actors involved in the procurement of defence equipment and services. The DAP is based on the principles of governance, transparency, competition, and accountability.
The most important actors in the DAP in Europe are:
European Commission (EC): The EC is responsible for initiating new programs of work, determining what projects to fund, and managing the budget. It also has a role in ensuring that there is compliance with European Union rules on competition and procurement.
Member States: Member States (MS) have an important role to play in the development of new capabilities and equipment. They provide funding through their national budget contributions and they are also involved in setting up new programs of work.
Industry: Industry plays an important role in providing technical expertise and making suggestions about how best to develop new capabilities or equipment.
The defence acquisition process is a long and complicated one. In Europe, it has several stages in which some of stages are:
The first stage of the process is called the "Statement of Need" (SON). This step is crucial for the Government to define what they want to acquire, based on their strategic vision, budget constraints, and national security interests. It is led by the Defence Ministry or Service and includes other national agencies such as the Defense Procurement Agency (DGA), NATO and EU partners.
The next step is to create a "Request for Information" (RFI) or "Request for Proposal" (RFP). This document provides more details about what has been decided in the SON document and offers potential suppliers a chance to submit their offer to provide equipment or services. It also allows them to ask questions regarding this new opportunity.
Once all responses have been received, they are analysed by a dedicated team inside the DGA (Defence Procurement Agency). This team will select only those proposals that meet all requirements defined within the RFI/RFP documents. Then, these proposals will be evaluated by another team composed of experts from different fields (technical/financial/legal).
Important Components In The Defence Acquisition Process
The defence acquisition process has two components: procurement and research & development (R&D).
Procurement is the process of purchasing goods or services for the military, while R&D is the research and development component that creates new technology. The procurement process includes the request for quotes, award of contract, receipt of goods and services, an inspection of goods and services, acceptance testing, delivery verification, configuration management, storage management, maintenance management, and disposal.
In addition to these two processes, there are other factors involved in defence acquisition such as:
Financial Management - Ensuring that funds are available to pay for goods or services purchased;
Legal Considerations - Ensuring that contracts comply with legal requirements;
Public Affairs - Communicating with stakeholders to ensure complete understanding;
Industrial Base - Maintaining a competitive industrial base that meets national security needs;
Business Process Reengineering - Improving efficiency through changes in business processes;
Systems Engineering - Managing complexity in development programs by using systems engineering methodologies
There are many facets involved in the acquisition process and many procurement professionals with knowledge and experience in contracting. These procurement specialists will help companies to improve their chances of success by helping them to gather enough information, preparing the request for proposal or tender documents, and assisting them throughout the entire process. As such, companies should choose those acquisition professionals carefully to ensure the quality of their work is maintained.
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