UK Defence Acquisition Process for NEC: Transaction Governance within an Integrated Project Team

Using a 3-tier framework for a study of the acquisition of an Advance Military Vehicle (AMV), we explore the shaping of the buyer-supplier relationship in the context of the United Kingdom's defense acquisition process. This relationship encompasses the Ministry of Defence (MoD), a monopsonist, partnering with a monopolistic defense industry. The transition from an oligopolistic to monopolistic defense industry is the result of a number of government policies that have created a consolidated defense industrial base. Defense industry relationships have historically been adversarial, making defense acquisition in the past inefficient. We identify Integrated Project Teams (IPTs) as being central to the institutional level aims of creating a collaborative industrial relation. IPTs characterize relational contracting practices at the governance level, which demands communication, collaboration, and trust. However, difficulties at the process level in utilizing relational contracting because of a lack of definition, communication, and mutual gain within the day-to-day business of the IPT limit the benefits of this approach. This failure to create an effective partnership between the MoD and its prime contractors highlights the major challenge facing the UK defense sector in its transition towards capability acquisition, such as Network Enabled Capability (NEC). NEC demands a more collaborative, through-life approach to defense acquisition.