The Pentagon fights against the consolidation of the defense industry

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Visitors to the Singapore Airshow stand next to a display for Lockheed Martin, one of the few remaining major arms suppliers, according to a new report from the US Department of Defense – Copyright AFP/File

The big-spending Pentagon on Tuesday launched a campaign against the consolidation of defense contractors, saying competition has diminished as arms suppliers merge and multiply.

In an official report, the Department of Defense (DoD), which has a budget of $768 billion this year, said the shrinking number of vendors threatens national security and limits the potential for developing new technologies. essential to future warfare.

The report says the department needs to make a concerted effort to boost small businesses, noting that they generate more patented innovations than larger companies, but may lack the financial strength to survive the department’s procurement process. , which often lasts for years.

“It’s a national security concern, but it’s also a major economic concern,” a senior government official said during a media briefing.

“Consolidation is also threatening small businesses that have been critical to our economy over the past decade; the number of small businesses in the defense industrial base has decreased by 40%,” the official said.

The report notes that today only a handful of giant corporations dominate US military procurement: Boeing, Lockheed Martin, Raytheon Technologies, General Dynamics and Northrop Grumman.

This group has declined sharply during the two decades of war in Afghanistan and Iraq.

Since the 1990s, the number of aerospace and defense contractors has fallen from 51 to just five, according to the report.

Major weapon system suppliers have also declined sharply in number.

Tactical missile producers fell from 13 to three, fixed-wing aircraft suppliers fell from eight to three, and satellite manufacturers fell from eight to four.

“Such consolidation leaves the DoD increasingly dependent on a handful of companies for critical defense capabilities,” the report said.

“Small businesses are driving innovation, producing 16.5 times more patents than large companies and training the next generation of suppliers to support the DoD mission,” the report said.

Without action, he said, the Pentagon could lose 15,000 more suppliers over the next decade.

Pentagon officials said they would work with government antitrust regulators to fight the consolidation.

The report came just as Lockheed Martin withdrew its $4.4 billion takeover bid for Aerojet Rocketdyne, which produces rocket engines, after the Federal Trade Commission took action last month to block the merger for antitrust reasons.

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