Switzerland - The pragmatic approach to defence procurement

Stefan Markowski

Defence and Peace Economics, 1998, vol. 9, issue 1-2, 99-118

Abstract: The Swiss approach to defence procurement has a number of distinct features. With modest levels of defence-related R&D, military acquisitions tend to be limited to proven and durable systems offering the user reliable performance over time as well as plenty of scope for future upgrades and adaptations. Long term cost-effectiveness is the key driver of the procurement process with the resultant high ratio of accumulated (military) capital per soldier but a relatively small share of defence in GDP. The Defence Procurement Agency acts as 'the-cradle-to-the-grave' system manager (i.e. it manages both the acquisition process and subsequent through-life support and final disposal). There is a strong commitment to domestic industry with high levels of local content in procurement (in part as a result of offsets) and support for exports. There is also a commitment to a mix of private and public ownership with the latter increasingly exposed to commercial business practices and standards. Most contracts are fixed price with an agreed 'fair' rate of return on capital invested by contractors subject to cost, performance and profitability audits. 'Managed competition' combines a high degree of openness to international trade in key sectors of the economy with protected market niches.

Keywords: Procurement; Defence-related industry; Defence technology; Competition; Contracting; Offsets; Systems management (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1080/10430719808404896

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