Tag Archives: mergers

Walmarts Of War

The words used by knowledgable people to describe the size of America’s military budget  range from “bloated’ to “obscene.” The United States spends more on military hardware, troops, bases and the like than most of the rest of the world combined. Even the Pentagon recommends significant cuts, including base closures.

So why doesn’t it happen? Why does Congress routinely vote more money for the Department of Defense than the Department requests?

The answer is in that famous James Carrville motto: It’s the economy, stupid.

Manufacturers who contract with Defense are significant employers in numerous Congressional Districts. Anyone who was paying attention several years ago when there was a round of base closings can attest to the howls of anguish emanating from the local proprietors of businesses that depended upon those defense workers to buy their goods, patronize their bars and restaurants and rent or buy housing.

The reality of that dependence is daunting enough; it has prevented us from paring back a no longer necessary, too-costly war machine that is increasingly focused on fighting the last war. (The Russians are currently demonstrating that cyberwars are much less expensive…) But so long as our tax dollars were supporting a wide range of manufacturers pumping money into an equally wide number of communities, it was possible to understand–if not approve– the justifications offered.

Now, however, we’re just enriching a shrinking number of plutocrats, as Mark Thompson has reported.

The merger mania that surged as the Cold War wound down—when 51 aerospace and defense companies shrank to five—is making a comeback. The “military-industrial complex” that President (and five-star Army general) Dwight Eisenhower warned us of in 1961 has funneled down to a few “Walmarts of war,” as Daniel Wirls, a professor at the University of California, Santa Cruz, quoted defense researchers calling the surviving contractors in a June 26 Washington Post column. Less competition can drive up costs while dampening innovation. Backers counter that efficiencies, job cuts, primarily, lead to lower costs that can save the Pentagon money—rarely—or let it buy more for the same price—also rare. And the middlemen—the lawyers and financiers who nurture these deals—do just fine, thanks.

Thompson detailed the defense mergers, and reported on their consequences.

In May, the Government Accountability Office (GAO) notedthe dire effect of consolidation. Even though the Pentagon has cut four programs from its must-have list, the GAO said, its remaining 82 major programs had grown in cost by $8 billion, to a cool $1.69 trillion. “Portfolio-wide cost growth has occurred in an environment where awards are often made without full and open competition,” the Congressional watchdog agency added. “Specifically, GAO found that DOD did not compete 67 percent of 183 major contracts currently reported for its 82 major programs.” Nearly half of those contracts—47 percent—went the current Big 5: Lockheed, Boeing, General Dynamics, Northrop, and United Technologies (the numbers are even grimmer for taxpayers if supposedly “competitive” bids lead to only a single bidder)….

Worse, the Pentagon pipeline for missiles and munitions is plagued with problems, including “material obsolescence and lack of redundant capability, lack of visibility into sub-tier suppliers causing delays in the notification of issues, loss of design and production skill, production gaps and lack of surge capacity planning, and aging infrastructure to manufacture and test the products,” the report warns. “Production gaps for munitions and missiles directly reduce the U.S. capability to deliver kinetic effects against adversaries.” In October, a second report from the Trump Administration saidthe nation has an increasingly “fragile” defense-industrial base with “entire industries near domestic extinction” and growing reliance on foreign sources.

It is increasingly obvious that the United States needs to rethink virtually all aspects of our approach to national defense–to determine what is really needed to keep the nation safe from foreign attack in the 21st Century, a time when danger comes less and less from state actors and more and more from terrorist cells and internet bots.

The kind of rethinking that is needed will require the best efforts of men and women who are experts in international relations and the intricacies of warfare–not simply military hardware, but strategy and especially the changing nature of the threats we face.

This is a particularly unfortunate time to be governed by corrupt buffoons who have no understanding of government, economics, foreign affairs or science.