The defense industrial complex in the United States differs from commercial industry in many ways. Though it is not immediately evident that commercial practices will be applicable to defense acquisition, it seems logical that many principles applied in the commercial sector will carry over to the defense side. In respect to costs, defense aerospace programs often do not benefit from the economies of scale that drive costs in the commercial sector, because
procurement rates of aerospace systems are usually comparatively low. The complexity and low volume of these systems places them on a craft level, verses the mass production techniques employed by the auto industry, for example. Thus, it seems defense systems could benefit greatly from a “mass customization” approach, combining economies of scale with economies of scope to create multiple platforms with a set of common components. In
addition, projects in the defense industry often are built program by program and company by company. The nature of defense contracts is to allocate funding for a specific program independent of, or without regard to, potential platform-based spin-offs in the future.
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