Recent Pentagon complaints that the defense industry has become too concentrated are misguided. Bigness is a prerequisite for surviving in a business where the threats that drive demand are unpredictable and the monopsony customer can’t be counted on to stick with military spending priorities from year to year. Past experience indicates that defense contractors who lack diversity don’t last long. Beyond that, mass is critical to achieving both economies of scale for competitive pricing and the kind of political footprint needed to keep programs on track in Congress. So bigness isn’t just important to success in the defense business — over the long run, it’s crucial to survival. I have written a commentary for Forbes here.
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