Defense Industry Consolidation: Competitive Effects of Mergers and Acquisitions.
Abstract
The sharp decline in spending by DOD since 1985 has resulted in a dramatic consolidation in the defense industry. The defense industry is more concentrated today than at any time in more than half a century. As the single customer for many products of the defense industry, DOD must have the ability to identify and address potential harmful effects of mergers and acquisitions. Questions have been raised about whether the consolidation has gone too far-adversely affecting competition in the industry. Many defense industry transactions are recent, and there is little evidence that the increased consolidation has adversely affected current DOD programs. Antitrust reviews have identified some problems, and remedies have been implemented. However, the consolidation could pose future problems unless DOD takes actions to improve its ability to identify problem areas and devise alternative ways to maintain competition in defense acquisition programs. There are several approaches DOD can take to maintain competition. For example, it can design acquisition strategies to compete missions rather than products and direct research and development funding to develop alternative suppliers or technologies. However DOD cannot know what action to take unless it has adequate visibility into the industrial base-especially at the lower tiers. Progress has been slow in gaining that visibility.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 04, 1998
- Accession Number
- ADA338904
Entities
Organizations
- United States Government Accountability Office