Mergers and Acquisitions in the Defense Industrial Base - Should the US Military Be Concerned?

Abstract : This article reviews recent changes within the defense industry and examines the effects such changes might have on the ability to conduct military operations. Specifically, it addresses the significant reduction in large defense firms capable of producing and delivering complex weapon systems and the concentration of market share in some key military product lines. Key issues are presented, to include the expected loss of competition from mergers and consolidation (horizontal integration). Other issues include increased vertical integration among prime contractors and the potential impact of consolidation on technology development. The article concludes with a brief review of key DoD initiatives intended to mitigate these concerns and a review of other options that offer some possible benefits.