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Pentagon fights defence industry consolidation

WASHINGTON (AFP) – The big-spending Pentagon opened a campaign on Tuesday against the consolidation of defence contractors, saying competition has dwindled as arms suppliers merge and supersize.

In an official report, the Department of Defense (DoD), which has a budget of USD768 billion this year, said the shrinking number of suppliers threatens national security and limits the potential for developing new technologies essential to future warfare.

The report said the department needs to make concerted efforts to boost smaller companies, noting they generate more patented innovations than larger companies but can lack the financial strength to survive the department’s often years-long procurement process.

“This is a national security concern, but it’s also a major economic concern,” said a senior government official in a briefing for media.

“Consolidation also threatens the small businesses that are critical to our economy over the past decade; the number of small businesses in the defence industrial base has declined by 40 per cent,” the official said.

The United States Department of Defense headquarters. PHOTO: AFP
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