Antimonopoly Proposals for the National Defense Authorization Act (NDAA)

May 29, 2024 National Security

The 2025 National Defense Authorization Act (NDAA) is an opportunity for the United States to reintroduce competition into the defense industrial base, into federal contracting, and into the markets for services offered to American servicemembers and veterans.

There is a well-recognized crisis in the defense base, with multiple conflicts putting strain on dramatically weakened industrial capacity. The primary reason for the reduced capacity is that defense consolidation is out of control. Since the end of the Cold War, the more than 50 firms that once made up the U.S. defense base have been reduced to the five prime contractors left today: Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, and Raytheon, (now known as RTX.) In February 2022, the Pentagon released a report that detailed the extreme consolidation in the defense industry, outlined the risks it posed to the country’s national and economic security, and identified the number of companies in the defense industrial base as insufficient.

As this consolidation occurred, the rules around federal procurement for defense contractors also changed. They now favor a handful of consolidated prime contractors and are stacked against the government. Prices are often opaque, and charges can be inappropriately billed to the government. Moreover, the government is frequently unable to maintain its own essential military equipment. At the same time, monopolistic middlemen in other industries, like pharmacy benefit managers (PBMs), have been able to change government rules and benefits to degrade the services that American servicemembers receive, by, for example, cutting off their access to independent pharmacies.

This memo outlines a series of straightforward policy proposals to include in the NDAA to fix the federal rules around defense procurement, ensure the government retains ownership and control over critical military systems, and restore servicemembers’ benefits. Where legislative text is available for such an amendment, it is included in an appendix.