Although down from its historic high during World War II, when it represented 20% of the civilian
workforce, the defense industry continues to play a major role in shaping Pentagon procurement
policy. The defense industry now employs 2.2 million people, about 2% of the civilian workforce.
In Fiscal Year 1999 the Department of Defense awarded $118 billion to contractors for goods and
services.
Since the end of the Cold War there has been significant consolidation in the U.S. defense
industry. Many of the mergers and buyouts that have occurred in the last decade are the result
of the "Last Supper" which took place in 1993, when then-Secretary of Defense Les Aspin urged top
industry officials to consolidate or go out of business. Secretary Aspin correctly noted that
the dissolution of the Soviet Union would mean lower defense budgets and fewer contracts,
resulting in surplus production capacity in the industry.
A number of high-level mergers have subsequently occurred, resulting in the concentration of
economic and political power in the hands of a few industry giants. For example, General Dynamics
Corporation, which operates Electric Boat, acquired Bath Shipbuilding in 1995 and National Steel
and Shipbuilding (NASSCO) in 1998, and now controls three of the nation's six shipyards which
produce Navy vessels. The "Big Three" in the defense industry -- Lockheed Martin, Boeing and
Raytheon -- alone accounted for 26% of all defense contracts in FY'99.
The Military Industrial Complex