Executive Summary
This report analyzes the impact of defense industry mergers and acquisitions (M&As) on the cost of Major Defense Acquisition Programs (MDAPs) for the DoD. It highlights the need for quantitative analysis to inform future M&A decisions and optimize the use of appropriated funds. The author developed an electronic database of historical MDAP costs to facilitate this analysis.
Why It Matters
This document is crucial for defense analysts as it provides a framework for understanding the economic implications of defense industry consolidation on weapon system costs and acquisition efficiency, directly impacting national security and resource allocation.
Key Takeaways
- Defense M&As have significantly reduced the number of suppliers, necessitating careful DoD oversight to prevent monopolistic pricing and ensure efficiency.
- A new electronic database of historical MDAP costs (MDAP Financial Database) was created to enable quantitative analysis of M&A impacts.
- Quantitative analysis of M&As is vital for the DoD, DoJ, and SEC to make informed decisions on future consolidations and optimize defense spending.
Strategic Relevance
The strategic relevance lies in understanding how defense industry consolidation affects the cost, availability, and technological advancement of critical weapon systems. This directly impacts the DoD's ability to equip its forces and maintain a competitive edge, influencing long-term defense planning and industrial policy.