The Future of the Defense Industries

The defense industries in the U.S. experienced a wave of mergers and acquisitions after the end of the Cold War that reduced supplier competition, but not production capacity. Professor Sapolsky in a series of studies is exploring the opportunities to reduce this production capacity overhang. In the past interwar production needs were maintained by government arsenals which preserved crucial design and manufacturing skills during periods of low military requirements. Now, however, most of the government owned arsenals have disappeared or shifted the focus of their activities exclusively on repair and maintenance work. In their place we have created what are essentially private arsenals, privately owned defense firms upon which the government is very dependent for weapon development and production capabilities and which in turn are very dependent upon the government for their revenues. The system is costly and encourages the production of needless military equipment.

The studies seek the ways to manage the private arsenal system effectively. Included in the work are studies of buyer behavior involving possible utilization of inter-service competitions to produce better outcomes, international collaboration or competition on both sides of the market, the up-grading of the role of Federally Funded Research and Development Centers (FFRDCs) as program integrators and government advisors, and joint ownership of key elements in the system in order to preserve certain vital military capabilities.