Pentagon: Bring on the Contractor Mergers

Far from opposing mergers and acquisitions among defense contractors, the Pentagon is "actually quite welcome to that," Undersecretary of Defense for Acquisition Ashton Carter told Bloomberg Television. The department expects shakeups among contractors in reaction to the impending downturn in defense spending.

But there's an exception to the general acceptance that mergers are inevitable: Defense officials don't want to to see the country's biggest contractors get any bigger. The Pentagon is "down to about five or six very large prime contractors who bid on many, many of our jobs and, in the interest of competition, we are not interested in seeing further consolidation and reduction in that number," Carter said. So Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics won't be joining forces any time soon. Which probably won't bother them too much, since each of those companies took in more than $14 billion in defense contracts all by themselves in fiscal 2009.