Pentagon’s Strategy to Tackle Lack of Competition in US Defence Sector Unveiled

The US Department of Defence’s newly announced strategy is part of the Biden administration’s efforts to promote competition across a spate of sectors aimed, in particular, at stemming inflation in the coronavirus pandemic-hit economy.

The Pentagon has rolled out its strategy to address competition within the US defence sector that stipulates new methods of boosting oversight among company mergers and lowering barriers to entry for small businesses.

In a report on Tuesday, the Department of Defence (DoD) pledged to “confront the challenges posed by industry consolidation and work to ensure sufficient domestic capacity and capability in priority industrial base sectors”.

The report pointed out that the Pentagon has become reliant on a small number of contractors over the past three decades, adding that the DoD would work with the Federal Trade Commission and Department of Justice if a proposed merger impacts the defence industry.

The DoD also vowed to take steps to ensure supply chain resilience in five sectors, including casting and forging, missiles and munitions, energy storage and batteries, as well as strategic and critical materials, and microelectronics.

The report came as The Hill quoted an unnamed senior administration official as saying that competition in the defence industry “is vital to the department because it improves cost and performance and fosters greater innovation for the products and services needed to support national defense”.

“Insufficient competition may leave gaps. And filling these needs, in some cases, leads to having only a single source, a small number of sources or dependence on adversarial foreign sources for a defense need, which can pose mission or national security risks”, the official added.

The unveiling of the Pentagon’s strategy followed President Joe Biden signing an executive order in July 2021 to tackle the lack of competition in American industry, rolling out 72 actions to mitigate the crisis which the White House said was accelerating inflation in an economy hit by the COVID-19 pandemic.

Commenting on the order, the White House said that “in over 75 percent of US industries, a smaller number of large companies now control more of the business than they did twenty years ago” and that this lack of competition “drives up prices for consumers”.