Faced with the lack of competition and failure of a functioning market in defense procurement, the Pentagon has installed endless rules and bidding procedures to try to create the illusion of a market.
It's similar to what's going on in electricity, where grid managers and public utility commissions conduct highly stylized "auctions" that are tilted in favor of the vendors and whose results surprise nobody but the customers paying the price.
"Because we are pretending like we have a competitive system, we are putting myriad rules and regulations in place to actually compensate for the fact that it's not true competition," Sen. Claire McCaskill, a Missouri Democrat, said of defense procurement at a hearing last month.
The thicket of rules deters bids from outside companies interested in breaking into the defense business, she said, adding, "it's almost surreal how ridiculous it is."
While mostly praising results of defense consolidation in a column in Defense News two years ago, former Lockheed Martin boss Norman Augustine warned that, in cases where only one company provides a crucial product (an example is aircraft carriers, made only by Northrop Grumman), "it is simply a stroke of the pen away from de facto nationalization of the industry."
That may not be such a terrible idea. Many countries handle defense purchases through state-owned companies.
But better we try to make the private defense base more diversified and competitive.
"We need a bold strategy to reverse consolidation and a vigorous debate on the consequences of globalization for U.S. security," former Undersecretary of Defense Dov Zakheim and former Missile Defense Agency chief Ronald Kadish wrote in The Washington Post this year.
Aspin and the other hosts of the Last Supper were trying to help taxpayers by getting contractors to streamline overhead costs through mergers. But in the long run, by cutting competition, they may have hurt taxpayers instead.
Augustine suggested in his column that Aspin should have served Rolaids at the famous meal. From defense company shareholders' point of view, champagne might have been more appropriate.
jay.hancock@baltsun.com
