Change as a cost driver in defence procurement

This paper discusses change transactions that occur in connection with the procurement of defence systems. The bases for the reasoning are the ideas of Miller and Vollman (1985 Miller JG Vollman TE (1985) The hidden factory – cutting the explosive growth of overhead costs requires mastery of more than just what happens on the shop floor Harvard Business Review Sept–Oct 142 150  Google Scholar]) and Eppinger (2001 Eppinger DE (2001) Innovation at the speed of information Harvard Business Review January 149 158  Google Scholar]). These researchers argue that unplanned flows of information lead to change transactions, causing significant overhead costs. According to this paper, change transactions in defence procurement could be caused by (a) the changes in technology taking place during the long lifetime of a defence system and (b) the structure and contents of the agreements between the defence agent (the procurer) and the defence industry (the supplier).