How Incentives & Interests Shape Armies - Competition, Consolidation & Procurement Policy

Why keep a base open if the military doesn't need it? Why pick a potentially second best product?

Welcome to the world of incentives & interests in defence procurement.

Budget and procurement decisions can shape militaries. They determine where troops are based, what equipment they use and a thousand other factors from their pay and compensation to how deep the reserve munitions stocks run in the event of war.

Given that, you'd be forgiven for thinking that the process would be simple - with the absolute focus being on getting exactly the equipment and facilities needed at the best possible price.

So why does it seem to go wrong so often?

Sometimes the answer might be corruption or errors (we've talked about those before and will again in future), but sometimes the answer might be a little more complicated.

Procurement decisions based not just on getting the best price and product, but also on a need to preserve industry competition, support local interests or maintain critical capability for example might be difficult to explain - until you consider all of the incentives and objectives that apply to those involved.

Today, we continue our "destroys armies" series by taking a look at defence procurement through the lens of personal and organisational incentives.

Patreon:
https://www.patreon.com/PerunAU

Caveats & Corrections:
All usual caveats and disclaimers apply in addition to those explicitly advanced in the video.

This video is, as usual, intended solely for entertainment purposes and should not be used as the basis for financial or other decisions

Relevant reading:
(list of sources abbreviated temporarily as I don't have access to the computer most of the research was done on)

State of Competition within the Defence Industrial Base (US Office of the Under Secretary of Defense for Acquisition and Sustainment 2022)
https://media.defense.gov/2022/Feb/15/2002939087/-1/-1/1/STATE-OF-COMPETITION-WITHIN-THE-DEFENSE-INDUSTRIAL-BASE.PDF

Industrial Capabilities Report to Congress - OASD Industrial Base Policy
https://www.businessdefense.gov/docs/resources/FY2021-Industrial-Capabilities-Report-to-Congress.pdf

Senate ICBM Coalition White Paper 2016
https://www.hoeven.senate.gov/imo/media/doc/ICBM%20Coalition%20White%20Paper%20December%202016%20-%20final.pdf

Analysis of Florida Defence Industry Incentives
http://edr.state.fl.us/content/returnoninvestment/DefenseIncentivesandIndustry.pdf

Featured article on the impacts of F-22 retirements and impacts
https://www.defensenews.com/air/2022/08/11/unmanned-program-could-suffer-if-congress-blocks-f-22-retirements-hunter-says/

Armata to troops in 2021
https://tass.com/defense/1232111

Indian Defence Acquisition Procedure 2022
https://www.mod.gov.in/sites/default/files/DAP2030new.pdfv

Defence procurement reform: The Defence and Security Public Contracts Regulations
UK House of Commons Research Report by Louisa Brooke-Holland
https://researchbriefings.files.parliament.uk/documents/CBP-9666/CBP-9666.pdf

Aerospace Industries Association Reports
https://www.aia-aerospace.org/industry-impact/#state-of-the-industry

UK Defence Industrial Strategy 2022
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/272203/6697.pdf

France-India Rafale offsets
https://www.defensenews.com/industry/2015/11/08/france-india-agree-to-details-on-rafale-offsets/

Bin chicken and bush turkey images
https://australian.museum/learn/animals/birds/australian-brush-turkey/
https://www.sbs.com.au/news/the-feed/article/friday-essay-the-rise-of-the-bin-chicken-a-totem-for-modern-australia/hvkitqwwt

Reported (rumoured) developments in a multinational project
https://www.reuters.com/world/europe/germany-forges-pact-leopard-2-successor-snub-paris-handelsblatt-2023-09-06/#:~:text=If%20confirmed%2C%20the%20deal%20would,beset%20by%20delays%20and%20disagreements.

Timestamps:
00:00 — How Incentives & Politics Shape Armies
02:33 — What Am I Talking About?
03:25 — Caveats
04:23 — Incentives
07:26 — An Idealised Version Of Defence Procurement
08:47 — Competition & Consolidation
20:02 — Why Is Defence Often Different?
24:10 — National And Local Interests
26:31 — International Context
31:30 — Politics Can Be Very Local
44:06 — Putting It All Together?
55:43 — Consequences & Countermeasures
58:15 — Conclusion
59:05 — Channel Update

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