Defense Industry Consolidation and Weapon Systems Cost Growth

Abstract

This thesis is a survey of the cost growth of weapon systems acquisition by the U.S. Department of Defense (DoD). It attempts to assess whether the extensive consolidation of the defense industry has led to any significant reduction of cost growth. The primary data sources for the cost of weapon systems are the Selected Acquisition Reports (SAR), which are published by DoD for the major acquisition programs. After an introductory section, Part 2 of the thesis provides background information and a literature review of U.S. defense industry consolidation. Part 3 examines several merger waves in the history of U.S. industry: First Merger Wave (1897-1904), Second Merger Wave (1916-1929), Third Merger Wave (1965-1969), Fourth Merger Wave (1984-1989), and the Fifth Merger Wave (1992-2000). Part 4 examines relevant legislation and antitrust issues, including the Basic Elements of the Antitrust Legal Framework, the Sherman Act (1890), the Clayton Act-Federal Trade Commission Act (1914), the Hart-Scott-Rodino Act, Horizontal Merger Guidelines, and the Herfindahl-Hirschman Index (HHI). Part 4 also looks at the role of the DoD in the consolidation of the defense industry. Part 5 focuses on the top five U.S. defense industry contractors: The Boeing Company, Lockheed Martin, Northrop Grumman, General Dynamics, and Raytheon. Part 6 describes the methodology of the study, including assumptions and guidelines, cost growth calculations, and data analysis. Part 7 presents the results of the statistical analysis. And Part 8 presents conclusions and recommendations. An overall assessment is made of the current U.S. defense industry to determine if consolidation has improved efficiency and lowered costs, or if further restructuring of the acquisition system is necessary.

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Document Details

Document Type
Technical Report
Publication Date
Jun 01, 2008
Accession Number
ADA483631

Entities

People

  • Christos K. Zahos
  • Ioannis A. Stratogiannis

Organizations

  • Naval Postgraduate School

Tags

Communities of Interest

  • Space
  • Weapons Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Business Administration
  • Commerce
  • Congress
  • Data Analysis
  • Defense Industry
  • Descriptive Analytics
  • Fixed Wing Aircraft
  • Governments
  • Intercontinental Ballistic Missiles
  • Investments
  • Law
  • National Governments
  • Public Policy
  • Statistical Analysis
  • United States
  • Weapon Systems

Readers

  • Business Analytics
  • Government Contracting/Procurement.
  • Military Logistics and Supply Chain Management