Open AccessHow to Bail Out a Defense Contractor: Cases on Securing a Supply Chain in extremis
Author(s) -
J Hasik
Publication year - 2021
Publication title -
defense acquisition research journal
Language(s) - English
Resource type - Journals
eISSN - 2156-8405
pISSN - 2156-8391
DOI - 10.22594/dau.20-858.28.02
Subject(s) - business , government (linguistics) , cash , term (time) , defense industry , christian ministry , supply chain , finance , economics , marketing , law , management , political science , philosophy , linguistics , physics , quantum mechanics
How can governments effectively bail out faltering defense contractors? While the idea may seem politically distasteful, any defense ministry with domestic suppliers may view the problem as supplier management in extremis. Reviewing nine prominent bailouts of defense contractors from the past 50 years, the author draws two conclusions. Providing long-term demand is very likely necessary and sufficient to maintain industry structures. Providing short-term infusions of cash may be necessary to maintain programs, but it is not always sufficient. If legislators and defense officials wish to consider either approach for short-term or long-term objectives, they should also consider the historical lessons of the financial and information asymmetries between government and industry, and the general uncertainty over how technologies will evolve.