Defense mergers and acquisitions: in the name of efficiency

Abstract

Over the past 20 years, the DoD experienced a precipitous decline in budgets relative to Gross Domestic Product (GDP) and a drastic decline in the number of suppliers in the defense industry. As a result of these developments, the DoD must make well-educated decisions in the future to ensure the optimal use of appropriated funds and the proper number of contractors in the defense industry. A historical analysis of mergers and acquisitions (MandAs) is critical to understanding the impact of defense industry consolidation on the cost of DoD weapon systems. This thesis develops the first electronic database containing the historical costs of DoD Major Defense Acquisitioin Programs (MDAPs). The MDAP Financial Database contains the cost of MDAPs from the Selected Acquiisitioin Report (SAR) summary tables for the past 26 years, the name of the contractors involved with the weapon systems during the cost report periods, classification of the weapon system and its North American Classification System (NAICS) industry code. This thesis also indetifies the importance of MandA research, provides preliminary analysis describing the DoD historical acquisiton environment and recommends future research the DoD would benefit from, including portfolio analysis.