Economic Study Reveals That Brand Specifications In Computer Hardware Procurement Needlessly Cost U.S. Taxpayers Up To $563 Million

Economic Study Reveals That Brand Specifications In Computer Hardware Procurement Needlessly Cost U.S. Taxpayers Up To $563 Million

The inclusion of brand-name specifications in federal computer hardware procurement lead to harmful consequences that needlessly cost U.S. taxpayers up to $563 million, according to a new economic study by R. Preston McAfee, J. Stanley Johnson Professor of Business, Economics and Management at the California Institute of Technology. The study, Improving Federal Procurement: The Benefits of Vendor-Neutral Contract Specifications, was commissioned by AMD (NYSE: AMD).

The report also found that approximately 69 percent of the applicable government solicitations for computer systems and technology in 2004 contained language that either required specific brand-name microprocessors or specified that the processor should be equivalent to a particular brand microprocessor.

Federal law (Federal Acquisitions Regulation) forbids the use of brand-name specifications under most circumstances. Use of a “brand-name or equal” clause is inherently biased against non-name-brand products and encourages purchasing decisions based on brand-name recognition and perception rather than objective performance metrics.

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