National Defense and Defense Contractors

All of these changes are causing conservative politicians to warn against moving away from the national defense buildup which began under President Reagan, and which, together with tax cuts, will likely cripple the American economy in the early years of the next century. Senior military personnel are girding for another military recession, such as that endured by the services under President Eisenhower, and the defense industry in the US, together with investors, is wondering how it will remain viable in the absence of the "Cold War."

This research examines the outlook for firms whose primarybusiness is the production of goods and services for the nation's governmental defense establishment, or firms whose national defense activity accounts for a significant proportion of their total output. The major issues involved in this examination are the solesource/solecustomer relationship which

1 2exists between the Department of Defense and many defense contractors, and the ability of defense contractors to convert operations

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dustrial Complex in the United States," Journal of Economic History, 45 (June 1985): 369375. 8J. Cypher, "Military Spending, Technical Change, and Economic Growth," Journal of Economic Issues, 21 (March 1987): 3359. 5with recognition in government that a massive increase in the bureaucracy would be required to support the then existing defense procurement system, and recognition in the private sector that massive profits were available through defense contracting, led to the development of the concept of state support for strategic industry.9 Long time periods required for research and development, massive demands for investment capital, and longproduction lives for major dedicated weapons systems led to the development and maintenance of the solesource/ solecustomer policy for weapons system acquisition.10 To be sure, the solesource/solecustomer approach has created dependencies on both sides. The armed forces have a vested interest in the continued financial and technological viability of their sources, and the very life of most defense contractors depends on a continuing stream of contract awards.11 Firms such as Grumman and Northrup, as examples, would find it extermely difficult, if not impossible, to su
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Some common words found in the essay are:
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Approximate Word count = 2303
Approximate Pages = 9 (250 words per page)

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