Ike is among my favorite presidents, if not my favorite president.
There was something called "The Last Supper" in the late 80's and early 90's where the defense industry was encouraged to consolidate. Now there are only "The Big 5" (Lockheed, Boeing, Raytheon, General Dynamics, & Northrop Grumman). We've gone from having 10-15 bids on major new platforms to pretty much 2, which then lead to sole source life cycle contracts (think about things like F-22, F-35, carriers, etc.).
Companies engage in more shady behavior in this environment because they know we still need them at the end of the day since there are so few of them. Sure, there are maybe a couple companies who are on the rise, but it'll take a looooooong time, if ever, for the current setup to improve. The Big 5 are also so "big" that they don't hesitate to buy out their competition either.
Despite heavy encouragement, a lot of the other major commercial companies don't want to enter into business with the DoD.
On top of that, Raytheon and Lockheed almost exclusively make their money from the DoD. Rather than invest in the quality of their products or innovation, they have spent the last 3 years buying back about $20 Billion of their own stock.
To some extent constriction of contractors was probably a necessity. Aside from the competitive benefits, the more companies the DOD took bids, it also increased national security risks. It also kept a source of suppliers healthy. As you noted, many companies don't want to have anything to do with the Defense Department even if they have the ability. To take on something of such magnitude from concept to production requires a tremendous amount of resources and money spent. If you don't land a contract, you sink the company with only the flotsam remaining.
In an odd way the DOD can't get things too competitive. They can't nickel and dime things to the point that nobody wants to build their weapons because the risk is too great if it doesn't result in a production contract. In that business a company can only receive so many rejection letters before they stop trying or go out of business.
Trust me, from an insider’s perspective, we miss that competition beyond belief. Also, your security protocols as a company were one of the ways you were selected as a winning bidder. Most of the money isn’t to be made in the black world anymore. The vast majority is life cycle sustainment now anyhow. Either way, there have been actually more security breaches in the modern era because contractors see it as a “cost.” In fact, we see more breaches on the corporate side than on the Government side. The problem: the contractors don’t have to be diligent because, again, there is nobody to compete with.
Also, we don’t nickel and dime our contractors. They rake us (specifically YOU, the taxpayer) over the coals to the tune of two of the Big 5 buying back $20B of their own stock. The Transdigm reports are also there to see as well. The entirety of gouging happens on their side, not the Government side.
There is also far less risk doing business with the Government. Yes, there is more steps, but we have actually lessened those requirements for non traditional defense contractors. Also, we always pay our bills on time and we provide Contractors with far better financing and cash flow than the private sector. This is evidenced by how well defense contractors did during COVID than the rest of the business segments.
They’re eating our lunch and it’s not even close. The consolidation was a huge mistake. Even if you think the defense industry needed to consolidate, allowing it to go from as wide as it was down to five is just pure idiocy.
