On-Demand Video: Impacts of Defense Consolidation on the Defense Industrial Base

Role of M&A in the Defense Industry
Two Panel Webinars
Dec. 14, 2022

Examines the impact of M&A strategy on company value in the government contracting community. Our empirical findings show that investors react positively to customer expansion but not as favorable to customer penetration, as financial markets appear to prioritize access to new revenue sources over improving efficiencies.

We have experienced major mergers and acquisitions (M&A) activities over the last 30 years in the defense industry. Each merger situation has its own unique attributes and driving factors. However, from an overall perspective, little analysis has occurred regarding the broader issues:

• How does the growing consolidation of the defense industry impact national security and defense innovation? 
• Has this historical consolidation in the context of the unique structure of the American defense industry resulted in harm to our core national security interests?

Two panel sessions will dig deeper into this topic:

1. The historical record and the role of M&A in a market economy
2. Impacts of defense consolidation on the defense industrial base

Panel 2: Impacts of Defense Consolidation on the Defense Industrial Base

Key Topics

• Is there a relationship between consolidation and defense innovation? 
• Is there a relationship between consolidation and the underlying health of the defense industrial base?
• If so, is it a positive or a negative relationship? What, for example, is the impact of defense consolidation upon competition and competitive forces within the defense industrial base? 
• How does defense consolidation impact our key national security interests?  
• Do existing oversight mechanisms provide an adequate review of any potential impacts?

Speakers

Jerry McGinn
Moderator & Executive Director
Center for Government Contracting 

David Berteau
President and Chief Executive Officer
Professional Services Council

Mark Duggan
Professor of Economics
Stanford University 

Halimah Najieb-Locke
Deputy Assistant Secretary of Defense for Industrial Base Resilience

Background Readings:

• Center White Paper: Importance of Customer Assets in Federal Mergers and Acquisitions
• The Impact of Industry Consolidation on Government Procurement