Defense, Antitrust Officials Concerned Over Industry Consolidation’s Impact on Production Capability

Halimah Najieb-Locke, a deputy assistant secretary at the Department of Defense, and other antitrust officials have expressed concerns over the impact of mergers and acquisitions among defense contractors on the industrial base’s ability to boost arms manufacturing and replenish supply amid demands in support of Ukraine, The Wall Street Journal reported Tuesday.

Speaking at a George Mason University-hosted seminar on consolidation, Najieb-Locke noted the smaller pool of contractors on which the Pentagon increasingly depends weaponry and other critical capabilities.

“That impacts everybody’s ability to ramp production,” added the deputy assistant secretary of defense for industrial base resilience.

Such concerns led to the Federal Trade Commission suing to block Lockheed Martin (NYSE: LMT) from purchasing Aerojet Rocketdyne and eventually, to the top defense contractor dropping the $4.4 billion deal in 2022.

Now, the FTC and the departments of Justice and Defense are analyzing another transaction for the rocket engine manufacturer acquisition proposed by L3Harris Technologies (NYSE: LHX).

“We are closely reviewing M&A that could further consolidate the [defense industrial base] and hurt competition,” said Najieb-Locke.