Defence

The Pentagon is fighting for the consolidation of the defense industry

The Pentagon launched the campaign on Tuesday at great expense consolidation of defense contractorsstating that competition has declined as mergers and arms suppliers increase.

An official report from the Ministry of Defense, which has a budget of $ 768 billion this year, said the reduction in the number of suppliers threatens national security and limits the capacity to develop new technologies needed for a future war.

The report says the department needs to make a concerted effort to encourage small companies, noting that they create more proprietary innovations than large companies, but they lack the financial strength to survive the procurement process, which often takes years.

“This is a national security issue, but it is also a serious economic issue,” a senior government official told a media briefing.

“Consolidation also threatens small businesses that have been crucial to our economy over the past decade; the number of small enterprises on the defense-industrial base has decreased by 40 percent, ”the official said.

The report notes that today only a few giant companies dominate supplies to the U.S. military: Boeing, Lockheed Martin, Raytheon Technologies, General Dynamics and Northrop Grumman.

This group has shrunk sharply over the two decades of war in Afghanistan and Iraq.

Since the 1990s, the number of major aerospace and defense contractors has shrunk from 51 to just five, the report said.

The number of suppliers of basic weapons systems has also fallen sharply.

Manufacturers of tactical missiles fell from 13 to three, suppliers of aircraft fell from eight to three, and manufacturers of satellites – from eight to four.

“Such consolidation makes the Ministry of Defense increasingly dependent on several companies for critical defense capabilities,” the report said.

“Small businesses stimulate innovation by producing 16.5 times more patents than large firms, and are forming the next generation of suppliers to support the Ministry of Defense’s mission,” the report said.

If left untreated, the Pentagon could lose another 15,000 suppliers over the next decade.

Pentagon officials said they would work with government antitrust authorities to combat consolidation.

The report came out the same way Lockheed Martin withdraws $ 4.4 billion Aerojet Rocketdyne takeover bidwhich produces rocket engines, after the Federal Trade Commission took action last month to block the merger on antitrust grounds.

https://www.thedefensepost.com/2022/02/15/us-defense-industry-consolidation/?utm_source=rss&utm_medium=rss&utm_campaign=us-defense-industry-consolidation The Pentagon is fighting for the consolidation of the defense industry

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