Consolidation and mergers in the defense industry puts the country at risk

The inability to adequately replenish weaponry such as missiles and artillery shells for Ukraine is revealing how defense industry consolidation has but the country and our allies at risk. There has been two decades of mergers and acquisitions, M&A, activity that have resulted in just six contractors possessing the lions share of Pentagon military equipment spending in contrast to about 50 firms in the 1990s that would compete for big contracts.
These large defense companies are like auto manufacturers in that they produce few of the things they use and subcontract the bulk of the work out. The defense industry base shank from 69,000 vendors in 2016 to 55,000 in 2021. These small companies form a choke point for the defense industry as they face labor and component shortages.
The Pentagon is increasingly dependent on an ever-shrinking number of contractors for critical equipment. This reliance will hamper any effort to quickly ramp up production. The Pentagon and antitrust officials have been too passive in stopping industry consolidation in the defense sector. There has been little academic analysis of consolidation in the defense industry. The issue with M&A is not price increases from lack of competition, but resupply and production issues.
Works Cited:
https://www.wsj.com/articles/lagging-arms-production-makes-pentagon-wary-of-further-industry-consolidation-11672754128?mod=article_inline