Advanced

Public Private Business Models for Defence Acquisition - A Multiple Case Study of Defence Acquisition Projects in the UK

Ekström, Thomas LU (2012)
Abstract (Swedish)
Alltsedan det kalla kriget slutade har försvarssektorn, framförallt militär logistik och försvarsmaterielanskaffning, genomgått en genomgripande transformation. Flera faktorer har bidragit till transformationen: förändringar i länders och organisationers försvars- och säkerhetspolitik; reducerade försvarsbudgetar; deltagande i fredsbevarande och fredsframtvingande operationer; erfarenheter från dessa operationer, inte minst inom logistikområdet; den revolutionära utvecklingen inom Informations- och Kommunikationsteknologin; utvecklandet av nya koncept inom företagande och affärslogistik; samt förändringar in den europeiska lagstiftningen avseende offentlig upphandling.

Inom den militära logistiken har den statiska försörjnings-... (More)
Alltsedan det kalla kriget slutade har försvarssektorn, framförallt militär logistik och försvarsmaterielanskaffning, genomgått en genomgripande transformation. Flera faktorer har bidragit till transformationen: förändringar i länders och organisationers försvars- och säkerhetspolitik; reducerade försvarsbudgetar; deltagande i fredsbevarande och fredsframtvingande operationer; erfarenheter från dessa operationer, inte minst inom logistikområdet; den revolutionära utvecklingen inom Informations- och Kommunikationsteknologin; utvecklandet av nya koncept inom företagande och affärslogistik; samt förändringar in den europeiska lagstiftningen avseende offentlig upphandling.

Inom den militära logistiken har den statiska försörjnings- och underhållskedjan från det kalla krigets dagar, vilken var utformad för militära förband som stod i beredskap, i händelse av ett fullskaligt krig i Europa, påbörjat en förvandling till en flexible och dynamisk operativ försörjnings- och underhållskedja, utformad för militära förband som sätts in i fredsbevarande och fredsframtvingande operationer över hela världen. Således måste nya typer av militära missioner försörjas. Som en konsekvens övervägs nya militära koncept; ny teknologi implementeras; och civila koncept utvärderas, anpassas och införs; för att förbättra “prestationen” (performance) och för att säkerställa valuta för pengarna.

Inom försvarsanskaffningen har det kalla krigets affärsmodell, materielanskaffning, börjat ersättas av ett spektrum av nya affärsmodeller, från den traditionella materielanskaffningen, via anskaffning av materiel och försörjning, till anskaffning av tillgänglighet och förmåga, det vill säga anskaffning av “prestation” (performance). Således utvärderas, anpassas och införs civila koncept; civila och militära produkter och tjänster köps direkt från hyllan; och Offentlig Privat Samverkan utvärderas och initieras; för att förbättra prestationen och för att säkerställa valuta för pengarna, samtidigt som den operativa risken i försörjnings- och underhållskedjan hanteras.

Denna licentiatavhandling redovisar ett forskningsprojekt som beställts av FMV, Försvarets Materielverk, och som genomförts för att “studera, analysera och utvärdera affärsmodeller avseende hur de kan hantera det nya försörjningskoncept som ett nytt logistiskt gränssnitt medför, med särskild tyngdpunkt på det risktagande som är den del av affärskonceptet”. Detta forskningssyfte användes för att formulerat tre forskningsfrågor:

• Forskningsfråga 1: Hur kan en generisk affärsmodell för en icke vinstdrivande, statlig försvarsanskaffningsmyndighet beskrivas?

Forskningsfråga 2: Vilka styrkor och svagheter har olika affärsmodeller inom försvarsanskaffning?

• Forskningsfråga 3: Vilka risker har olika affärsmodeller inom försvarsanskaffning?

Genom att använda teori och praktik från områdena affärsmodeller, Offentlig Privat Samverkan, försvarsanskaffning och militär logistik utvecklades en generisk Offentlig Privat affärsmodell för försvarsanskaffning. Den generiska modellen utgörs av otaliga variabler, vilka möjliggör ett flertal möjliga konfigurationer. Modellen användes i en multipel fallstudie för att beskriva och analysera fyra försvarsanskaffningsprojekt i Storbritannien. Den multipla fallstudien visade att den generiska Offentlig Privata affärsmodellen är användbar för att beskriva försvarsanskaffningsprojekt. Modellen har också demonstrerat att den är användbar för att analysera försvarsanskaffningsprojekt, inklusive prestation och risk.

Den Offentlig Privata affärsmodellen har demonstrerat sin användbarhet genom att upptäcka exempel på intern och extern “inkonsekvens” (misalignment). Den interna “inkonsekvensen” uppstår då konfigurationer av affärsmodellens beståndsdelar motverkar varandra. Forskningen har upptäckt exempel på hur hanteringen av operativ risk i försörjnings- och underhållskedjan skapar nya risker i andra beståndsdelar. Extern “inkonsekvens” uppstår då en konfiguration av affärsmodellen motverkar den affär den utformats för att stödja, eller den strategi den är tänkt att implementera. Forskningen har upptäckt exempel då konfigurationen av affärsmodellen motverkar den övergripande strategin, exempelvis att överföra risk till industrin eller försök att få industrin att höja prestationen. Således borde den Offentlig Privata affärsmodellen vara användbar för att identifiera och eliminera negativa mönster, samt förstärka positiva mönster.

Forskningen har avslöjat tre potentiella generiska problem med prestationsbaserade kontrakt: ett “definitionsproblem” (dvs. vad skall mätas); ett “mätproblem” (dvs. när, var och hur skall det mätas); och ett “jämförelseproblem” (dvs. med vad skall det jämföras). Forskningsresultaten visar att det måste göras explicit vilka dimensioner av prestation; exempelvis hastighet, kvalitet, kostnad, flexibilitet och tillförlitlighet; det är som skall mätas, samt varför andra skall exkluderas. Forskningen föreslår att prestation måste specificeras explicit för prestationsbaserade kontrakt för att undvika onödiga problem med tolkningar. Forskningen visar vidare att mätetal för prestationer måste beskrivas explicit. Dessutom understryker resultaten vikten av att ha etablerade referensvärden, med vilka mätningar av de viktigaste prestationsindikatorerna kan jämföras. (Less)
Abstract
Since the ending of the Cold War, the defence sector, particularly the areas of military logistics and defence acquisition, has been undergoing a comprehensive transformation. There are several factors that explain this transformation: changes in defence and security policies for nations and organisations; reductions in defence expenditure; participation in Peace Support Operations; Lessons Learned from these operations, especially in the area of logistics; revolutionary development in the area of Information and Communication Technology; emergence of novel Commercial Best Practises in the areas of business and business logistics; and changes in the legislation regarding the conduct of public procurement in Europe.

In military... (More)
Since the ending of the Cold War, the defence sector, particularly the areas of military logistics and defence acquisition, has been undergoing a comprehensive transformation. There are several factors that explain this transformation: changes in defence and security policies for nations and organisations; reductions in defence expenditure; participation in Peace Support Operations; Lessons Learned from these operations, especially in the area of logistics; revolutionary development in the area of Information and Communication Technology; emergence of novel Commercial Best Practises in the areas of business and business logistics; and changes in the legislation regarding the conduct of public procurement in Europe.

In military logistics, the relatively easily described static supply and support chains of the Cold War Era, designed for military units that stood in preparedness, Just-in-Case, of full-scale military conflicts in Europe, are now being substituted for flexible, dynamic operational supply and support chains, designed for military units that are deployed on Peace Support Operations around the globe. Hence, new types of missions have to be provided for. As a consequence, new military concepts have to be considered; new technology is being implemented; and new Commercial Best Practises are being evaluated, adapted and adopted; in order to enhance performance and ensure Value-for-Money.

In defence acquisition, the single Business Model of the Cold War Era, i.e. procurement of equipment, is being replaced by a spectrum of emerging Business Models, ranging from the traditional procurement of equipment, via acquisition of equipment and support, to acquisition of availability and capability, i.e. acquisition of performance. Consequently, new Commercial Best Practises are being evaluated, adapted and adopted; Commercial and Military-Off-The-Shelf products and services are being utilised; and Public Private Participation, Cooperation, and Partnerships are being investigated and initiated; in order to enhance performance and ensure Value-for-Money, while simultaneously mitigating operational risk in the supply and support chains.

This licentiate thesis reports on a research project that was commissioned by FMV, the Swedish Defence Materiel Administration, and conducted in order to “study, analyse, and evaluate Business Models regarding how they can handle the new supply concept that a new logistical interface brings about, with a particular emphasis on the risk taking that is part of the business concept”. This research purpose was used to formulate three Research Questions:

• Research Question 1: How can a generic Business Model for a non-profit, governmental, Defence Procurement Agency be described?

• Research Question 2: Which strengths and weaknesses do different Business Models have in the context of defence acquisition?

• Research Question 3: Which risks are associated with different Business Models in the context of defence acquisition?

Using constructs from: Business Model theory, Public Private Participation theory, defence acquisition theory and practise, and military logistics theory and practise; a generic Public Private Business Model for defence acquisition was developed. The generic model consists of numerous variables, which enables an array of possible configurations. The model was used in a multiple case study to describe and analyse four defence acquisition projects in the UK. The multiple case study demonstrated that the generic Public Private Business Model is useful in order to describe defence acquisition projects. The model has also demonstrated that it is useful in order to analyse acquisition projects, including performance and risk.

The Public Private Business Model has demonstrated its usefulness by discovering internal and external misalignments. The internal misalignments are Business Model configurations where the different building blocks are working against each other. The research has revealed examples where the mitigation of operational risk in the supply and support chains creates new risks in other building blocks. An external misalignment occurs when a Business Model configuration works against the deal for which it was designed, or the strategy that it is intended to realise. The research has revealed examples where there is a risk that the Business Model configuration is detrimental to the overarching strategy, e.g. transferring risk to the private sector or incentivising industry to enhance performance. Hence, the Public Private Business Model ought to be useful to identify and eradicate negative patterns and to identify and reinforce positive patterns.

The research has revealed three potential generic problems for Performance Based Contracts: a “definition problem” (i.e. what to measure); a “measurement problem” (i.e. when, where and how to measure); and a “comparison problem” (i.e. with what to compare). The research results demonstrate that it must be made explicit which dimensions of performance; e.g. speed, quality, cost, flexibility and dependability; that should be measured, and why others should be omitted. The research suggests that performance must be explicitly specified for any Performance Based Contract in order to avoid any unnecessary problems with interpretations. Furthermore, the research indicates that performance metrics must be explicitly described. In addition, the results emphasise the importance of having an established baseline, against which to compare the measurements of Key Performance Indicators. (Less)
Please use this url to cite or link to this publication:
author
supervisor
organization
publishing date
type
Thesis
publication status
published
subject
keywords
Defence transformation, military logistics, supply chain, support chain, defence acquisition, Business Model, Public Private Participation, Cooperation and Partnership, Value-for-Money, performance, risk, multiple case study, misalignment, transformation av försvaret, militär logistik, försörjnings- och underhållskedja, försvarsanskaffning, affärsmodell, offentlig privat samverkan, valuta för pengarna, prestation, multipel fallstudie, inkonsekvens
pages
456 pages
publisher
Lund University (Media-Tryck)
external identifiers
  • other:LUTMDN/TMTP--1054--SE
ISBN
978-91-7473-359-4
language
English
LU publication?
yes
id
41f6bde3-2b95-4a4f-b1bd-646022cb9fa6 (old id 3051798)
date added to LUP
2012-09-12 13:21:02
date last changed
2016-09-19 08:45:05
@misc{41f6bde3-2b95-4a4f-b1bd-646022cb9fa6,
  abstract     = {Since the ending of the Cold War, the defence sector, particularly the areas of military logistics and defence acquisition, has been undergoing a comprehensive transformation. There are several factors that explain this transformation: changes in defence and security policies for nations and organisations; reductions in defence expenditure; participation in Peace Support Operations; Lessons Learned from these operations, especially in the area of logistics; revolutionary development in the area of Information and Communication Technology; emergence of novel Commercial Best Practises in the areas of business and business logistics; and changes in the legislation regarding the conduct of public procurement in Europe.<br/><br>
In military logistics, the relatively easily described static supply and support chains of the Cold War Era, designed for military units that stood in preparedness, Just-in-Case, of full-scale military conflicts in Europe, are now being substituted for flexible, dynamic operational supply and support chains, designed for military units that are deployed on Peace Support Operations around the globe. Hence, new types of missions have to be provided for. As a consequence, new military concepts have to be considered; new technology is being implemented; and new Commercial Best Practises are being evaluated, adapted and adopted; in order to enhance performance and ensure Value-for-Money.<br/><br>
In defence acquisition, the single Business Model of the Cold War Era, i.e. procurement of equipment, is being replaced by a spectrum of emerging Business Models, ranging from the traditional procurement of equipment, via acquisition of equipment and support, to acquisition of availability and capability, i.e. acquisition of performance. Consequently, new Commercial Best Practises are being evaluated, adapted and adopted; Commercial and Military-Off-The-Shelf products and services are being utilised; and Public Private Participation, Cooperation, and Partnerships are being investigated and initiated; in order to enhance performance and ensure Value-for-Money, while simultaneously mitigating operational risk in the supply and support chains.<br/><br>
This licentiate thesis reports on a research project that was commissioned by FMV, the Swedish Defence Materiel Administration, and conducted in order to “study, analyse, and evaluate Business Models regarding how they can handle the new supply concept that a new logistical interface brings about, with a particular emphasis on the risk taking that is part of the business concept”. This research purpose was used to formulate three Research Questions:<br/><br>
• Research Question 1: How can a generic Business Model for a non-profit, governmental, Defence Procurement Agency be described?<br/><br>
• Research Question 2: Which strengths and weaknesses do different Business Models have in the context of defence acquisition?<br/><br>
• Research Question 3: Which risks are associated with different Business Models in the context of defence acquisition?<br/><br>
Using constructs from: Business Model theory, Public Private Participation theory, defence acquisition theory and practise, and military logistics theory and practise; a generic Public Private Business Model for defence acquisition was developed. The generic model consists of numerous variables, which enables an array of possible configurations. The model was used in a multiple case study to describe and analyse four defence acquisition projects in the UK. The multiple case study demonstrated that the generic Public Private Business Model is useful in order to describe defence acquisition projects. The model has also demonstrated that it is useful in order to analyse acquisition projects, including performance and risk.<br/><br>
The Public Private Business Model has demonstrated its usefulness by discovering internal and external misalignments. The internal misalignments are Business Model configurations where the different building blocks are working against each other. The research has revealed examples where the mitigation of operational risk in the supply and support chains creates new risks in other building blocks. An external misalignment occurs when a Business Model configuration works against the deal for which it was designed, or the strategy that it is intended to realise. The research has revealed examples where there is a risk that the Business Model configuration is detrimental to the overarching strategy, e.g. transferring risk to the private sector or incentivising industry to enhance performance. Hence, the Public Private Business Model ought to be useful to identify and eradicate negative patterns and to identify and reinforce positive patterns.<br/><br>
The research has revealed three potential generic problems for Performance Based Contracts: a “definition problem” (i.e. what to measure); a “measurement problem” (i.e. when, where and how to measure); and a “comparison problem” (i.e. with what to compare). The research results demonstrate that it must be made explicit which dimensions of performance; e.g. speed, quality, cost, flexibility and dependability; that should be measured, and why others should be omitted. The research suggests that performance must be explicitly specified for any Performance Based Contract in order to avoid any unnecessary problems with interpretations. Furthermore, the research indicates that performance metrics must be explicitly described. In addition, the results emphasise the importance of having an established baseline, against which to compare the measurements of Key Performance Indicators.},
  author       = {Ekström, Thomas},
  isbn         = {978-91-7473-359-4},
  keyword      = {Defence transformation,military logistics,supply chain,support chain,defence acquisition,Business Model,Public Private Participation,Cooperation and Partnership,Value-for-Money,performance,risk,multiple case study,misalignment,transformation av försvaret,militär logistik,försörjnings- och underhållskedja,försvarsanskaffning,affärsmodell,offentlig privat samverkan,valuta för pengarna,prestation,multipel fallstudie,inkonsekvens},
  language     = {eng},
  note         = {Licentiate Thesis},
  pages        = {456},
  publisher    = {Lund University (Media-Tryck)},
  title        = {Public Private Business Models for Defence Acquisition - A Multiple Case Study of Defence Acquisition Projects in the UK},
  year         = {2012},
}