The Organization of the Defense Support System: An Economic Geography Perspective

Abstract

In the context of restricted budgetary resources and the growing cost of maintenance, repair, and overhaul (MRO) activities, a major issue for modern armed forces is to sustain defense platforms. A possible method consists of realizing economies of scale through the concentration of maintenance activities, which involves the spatial reorganization of existing industrial sites dedicated to MRO. This article provides a formalized framework to discuss the optimal organization for the MRO of defense platforms in space. The public planner organizes the maintenance of defense platforms with only two possible spatial configurations. In the dispersed configuration, two industrial production units in charge of the maintenance optimally cover space, whereas in the concentrated configuration, a unique industrial unit covers space. Focusing on the tipping point between the two configurations, the balance of forces between agglomeration and dispersion in defense support activities is described and discussed. On the one hand, economies of scale provide an opportunity to optimize defense support costs, favoring concentration in a unique industrial unit. On the other hand, space causes dispersion to reduce both transport costs and operational social costs. This trade-off illustrates a general principle in spatial economics with an application to MRO production in the French case.

Keywords:

• Social cost
• space
• defense
• maintenance repair and overhaul (MRO)

JEL CODES:

• H41
• H54
• R41
• R53

Notes

1. The later amount is under-evaluated since the French budget office (Cour des Comptes) planned a need for 4.1 billion of euros for the 2014–2019 period.

2. SIMMAD: Structure Interarmées de Maintenance des Matériels de Défense, which is an administrative agency in charge of the joint service flying platform MRO.