>If the government started bidding out smaller real hardware contracts to new companies, we would see a rise in new competitors and an accompanying rise in qual

>If the government started bidding out smaller real hardware contracts to new companies, we would see a rise in new competitors and an accompanying rise in quality and roi. Do you have any evidence that this would actually work? Small companies generally don't have the resources to do large project. How is a small company going to build a state-of-the-art fighter jet? It's pretty much impossible. Look at other countries to see how they do it with small companies: they don't. The European nations basically have only a few large companies, the Chinese are the same, and so are the Russians. The reasons America had a lot more aerospace companies in decades past are 1) planes were a lot simpler, 2) they were wiling to accept higher risk back then (some test planes crashing and killing the pilot was OK), and 3) the defense budget was enormous because there was a Cold War and the US's economy was gigantic thanks to being the only industrial power left standing after WWII. #3 is probably the biggest factor, and isn't going to happen again. As for the stuff about golden parachutes, that's endemic to US companies in general, not just contractors. I don't see how it really affects competition much since everyone does it, except that it adds costs to American companies that, for instance, Chinese companies do not have, so it's probably bad in the long term for American competitiveness, but that really doesn't affect this argument for competitiveness between US government contractors (since they don't compete with foreign companies anyway). The bit about "a nice private sector job post government retirement" is pretty much the same: it's bad for American competitiveness, but doesn't affect things much internally, except that it probably makes upstart companies more competitive as far as costs go, but since acquiring contracts is very political it actually probably hurts upstarts since they're not connected the way the incumbents are. Also, I should add they government actually does farm out smaller contracts to smaller companies. They even have a policy I think which causes them to do this more than they probably should, in an effort to help small companies. They don't farm out fighter jets to small companies, of course, but there are a bunch of processes that cause them to farm out small things to small companies. The other thing that's important to understand is that most small companies do NOT want government contracts, if they're not already in that business. It's not like there's small companies that would be happy to bid on these things but are being prevented. In reality, government contracting is a giant pain in the ass, so the companies that do it are ones that are interested in it, and are good at it: their processes are set up to handle that kind of business model. Bidding on contracts is a pretty arduous thing and requires a lot of specialized skill and knowledge and special staff, so companies that aren't in that sector just don't bother.