ART - Acquisition of Complex Products 2010

The document discusses the lessons for mitigating risk under internal and contracted assembly for complex products. It provides practical implications for contract management staff, agency executives, and policy makers. The document recommends that different audiences should read different sections of the report based on their specific interests. It also introduces a symbol glossary to simplify the concepts and ideas discussed in the text. The document explains the concept of complex products and their risks. It states that simple products are easily defined and verified, while complex products have qualities that are difficult to spell out and verify. Government agencies may not know the return on investment or the cost of complex products before purchasing them. The document refers to the Coast Guard's deepwater system as an example of a complex product. The document highlights two key characteristics of complex products that make their acquisition challenging. Firstly, complex products have product specification challenges, meaning that their cost, quality, and quantity parameters are not easily determined, specified, and verified. This leads to uncertainty for government agencies in determining the alternatives available in the market. Secondly, complex products often require specialized investments that may not generate value beyond the specific product being produced. This creates a "lock-in" problem, where parties become locked into a contract and cannot deploy their specialized investments elsewhere. The document emphasizes the need for careful consideration and risk mitigation strategies when acquiring complex products, especially to address the challenges of product specification and potential lock-in. It provides insights and recommendations based on the Coast Guard's deepwater experience. The document also discusses the importance of managing contracts effectively to mitigate risks associated with opportunistic behavior from contractors.