Why Is the U.S. Defense Industrial Base So Isolated from the U.S. Economy?

In April 2022, Deputy Secretary of Defense Kathleen Hicks expressed concern about the “substantial decline” in competition within the U.S. defense industrial base. A February 2022 study by the Department of Defense (DOD) found that after decades of consolidation, the number of defense prime contractors had shrunk from 51 to fewer than 10. Further, many segments of the defense market have become controlled by companies with monopoly or near-monopoly positions. While Hicks is a leader in the Democratic administration, her concerns are bipartisan: Former president Donald Trump stated in 2019 that U.S. defense companies have “all merged in so it’s hard to negotiate. . . . It’s already not competitive.”