insights

In complex military systems and equipment, the best choice goes beyond price.

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Aerospace and Defense

One of Murphy’s many laws adapted to combat states that “One should never forget that, when facing the enemy, one’s own weapon has been manufactured by the company that submitted the lowest bid.” This phrase reflects a frequent and at the same time very worrying reality, due to its possible consequences.

Indeed, an administrative decision, derived from the application of a generally valid regulation for the acquisition of goods in the public sector, can have fatal consequences when it comes to the actions of the Armed Forces (FAS).

SAFs are constantly faced with a difficult and challenging choice when it comes to procuring the best systems, subsystems and equipment. On the one hand, they need technologically advanced equipment that exceeds the minimum requirements and improves the efficiency of their mission. On the other hand, the Ministry of Defense, like all Public Administrations, is subject to budgetary restrictions that condition the aspiration of the Armed Forces to have capabilities that allow them to achieve superiority in combat as a key factor for the success of their mission.

In addition, systems and equipment that provide the SAF with strategic autonomy defined on the basis of operational sovereignty (the ability to freely use equipment and systems) and technological sovereignty (the freedom to make changes to those systems and equipment) are becoming increasingly imperative.

 

 

 

In general, tenders for complex military equipment and systems usually include weighted criteria for evaluating bids on the basis of technical, industrial and economic content. However, the technical content (compliance with the technical specifications) and the content of the industrial participation plan are often difficult to assess properlyThe company’s participation in the industrial sector, both because of its complexity and because of the possible lack of homogeneity of the information provided to the Administration, or because of the lack of capacity to analyze the degree of strategic autonomy that such industrial participation provides.

In this context, the Administration may be forced, unintentionally, to establish by default a selection approach aimed at verifying “compliance with minimum technical requirements” and the simple measurement in percentage of the degree of nationalization of industrial plans, opting for price as a discriminating element in evaluating the proposals of the various competing bidders.

But, undoubtedly, there are key reasons why “lowest price procurement, meeting minimally acceptable technical requirements and an industrial plan in terms of national percentage” cannot be considered fully valid for complex and high-tech equipment acquisitions, and those reasons are the risks they entail for the combatant and for the success of the mission.

In short, the lowest price is not always the best option. FAS has a need for high quality systems and equipment that exceed the “minimum requirements” threshold. to achieve superiority in current and future battlefield engagement, in multi-domain environments and against similar or nearby adversaries, because it is essential to reduce your risks and ensure your chances of success.

 

 

Therefore, the decision should not be focused on compliance with the “minimum technical requirements” when evaluating various competing bids and deciding on the basis of the lowest price. On the contrary, one should assess the overall value of the technology under consideration, its degree of maturity and, most importantly, take into account the ability of that technology to optimize the combat capability of the SAF.

There are several critical factors that should be incorporated into the decision-making process to ensure that the acquired equipment will provide high-level value over the long term:

 

Overall tactical effectiveness and strategic autonomy

The most important factor to consider when contemplating any systems and equipment supply contract is how the technology will enable the warfighter in current and future operations. A low-cost solution that neither helps to effectively protect these warfighters nor gives them a tactical advantage against a rapidly evolving enemy is, at best, a stopgap solution that could end up putting lives and mission success at risk.

Rather than focusing exclusively on initial procurement costs, decision makers should ask themselves whether:

  • Will this technology effectively help combat units achieve the capabilities the SAF has established, wants and needs?
  • Will it provide user units with ameasurable and significant advantage over opposing forces?
  • Will it effectively reduce current and future capability shortfalls that prevent the SAF from achieving engagement superiority?
  • What degree of strategic autonomy will it provide, measured in terms of operational sovereignty (freedom of use) and technological sovereignty (freedom to introduce changes)?

 

 

Affirmative answers to these questions should help identify solutions that effectively improve SAF capabilities and increase their chances of success on the battlefield. The answers may point to technologies that may not be the least expensive options, but may end up being the best overall investments.

 

Long-term reliability and scalability

These two factors are equally critical in the decision and are part of the long-term high-level value of the system or equipment to be obtained and should be considered in the decision making process.

In fact, it is quite possible that the solution that best responds to these factors above may involve a higher initial investment, but ultimately end up costing much less in the long run.

 

The design of offers needs to be refocused

In view of the above considerations that may surround, and decide, the selection process in a bidding process (compliance with minimum technical requirements, exclusive consideration of the percentage of nationalization of the industrial plan and price as a determining factor in practice), it is advisable to focus the proposals not only in the technical requirements, but also in the technical requirements. in the contribution of the industrial plan associated with the strategic autonomy it provides to the Armed Forces.as a differentiating factor of the offer.

Tecnobit-Oesia Group has been providing national operational, technological and industrial sovereignty to the national defense for more than forty-five years through innovative quality solutions in key areas for multi-domain operations, such as secure tactical communications
(datalink, encryption and radio), intelligent vision systems (electro-optical systems, intelligent terminals and IRST systems), and simulation.

We are aware of the value of developing and producing military systems and equipment with a high degree of quality in the ultimate fulfillment of the contracted technical requirements.The company is committed to the development of a new, more efficient and cost-effective system, over and above considerations strictly associated with price, and its contribution to overall tactical effectiveness, reliability and long-term scalability for the benefit of mission accomplishment and the protection of the lives of combatants, providing a high degree of operational, technological and industrial sovereignty.

Salvador Álvarez, Managing Director in Grupo Oesía