A knowledge and capability based view on performance-based contracting in defence acquisition

The Swedish Armed Forces and the Swedish Defence Materiel Administration, i.e. the Swedish Defence Procurement Agency (DPA), are currently undergoing a radical transformation. The transformation involves shifting roles and responsibilities, and transfer of resources, including personnel, to the DPA. In the new business model, the DPA will assume responsibility for defence equipment from a life-cycle perspective, i.e. both equipment and support, whereas previously, the DPA was only responsible for acquisition of equipment, and the Armed Forces was responsible for operations and support. This paper reports on a conceptual pre-study that was conducted in order to explore the concept of “performance-based contracting (PBC) capabilities”, as well as to examine what types of capabilities that the Swedish defence agencies should consider for implementing a performance-based defence acquisition and logistics model. In addition, the study was aimed at identifying relevant theoretical perspectives and conceptual frameworks for empirically studying, as a next step, capability development in performance-based contracting. The pre-study proposes a definition of PBC capabilities, identifies three key types of PBC capabilities, and highlights four theoretical perspectives as potentially relevant and useful for studying capability development in performance-based acquisition and contracting.