Defense Consolidation: Giants & Myths – War on the Rocks
- defense industrial base is undergoing a notable transformation as conflicts and technological advancements prioritize wartime capabilities over peacetime efficiency.
- Dustin Walker, senior director for policy at Anduril Industries, argues that these acquisitions differ fundamentally from the post-Cold War consolidation. He contends that while traditional defense primes consolidated...
- concerns have been raised that these acquisitions mirror the "Last Supper" consolidation, harming small businesses and reducing diversity.
Defense technology companies are dramatically reshaping the U.S. industrial base, prioritizing wartime capabilities over peacetime efficiency, according to a new report. Acquisitions are the primary driver, with firms like Anduril Industries leading the charge to foster competition and scale production, a shift from post-Cold War consolidation.Dustin Walker, a senior director at Anduril, clarifies these acquisitions are about expanding capabilities, not just cost-cutting, and leveraging small business partnerships. Despite concerns, the Pentagon is promoting competition via modular systems. Read more at News Directory 3 for insights on how these defense “unicorns” are partnering with small businesses to win big contracts. Discover what’s next for these crucial alliances.
Defense Technology Companies Reshape U.S. Industrial Base Through Acquisitions
Updated June 04, 2025
the U.S. defense industrial base is undergoing a notable transformation as conflicts and technological advancements prioritize wartime capabilities over peacetime efficiency. A new generation of defense technology companies is emerging, using acquisitions to drive innovation and scale production.
Dustin Walker, senior director for policy at Anduril Industries, argues that these acquisitions differ fundamentally from the post-Cold War consolidation. He contends that while traditional defense primes consolidated to cut costs, defense technology companies are expanding capabilities and fostering competition.
concerns have been raised that these acquisitions mirror the “Last Supper” consolidation, harming small businesses and reducing diversity. Though,Walker counters that acquisitions are vital for achieving economies of scale and attracting new entrants,including small businesses,by signaling the potential for profitable exits.
walker points to Anduril’s acquisition of Blue Force Technologies as an example of expanding, not consolidating, the industrial base. This acquisition enabled Anduril to win a spot in the Air Force’s Collaborative Combat Aircraft program, partnering with over 40 small businesses to build the YFQ-44A.
“Defense technology companies are using every tool at thier disposal, including acquisitions, to realize this vision, and they’re doing so with small businesses as vital partners.”
Unlike the post-Cold War mergers aimed at cost reduction, today’s acquisitions seek to create firms capable of rapid innovation and large-scale production. The rise of defense “unicorns” like SpaceX, Palantir, and Anduril demonstrates this shift, providing the Pentagon with more vendors and greater leverage.
Despite concerns about vendor lock-in, the Pentagon emphasizes modular open systems architecture, promoting competition and avoiding reliance on single vendors. Small businesses, though, continue to face challenges such as complex procurement processes and unstable funding.
walker emphasizes that defense technology companies and small businesses share a common goal: to compete, innovate, and contribute to U.S. defense. He advocates for a culture of continuous competition,where new entrants have opportunities to compete and win.
What’s next
The future of the defense industrial base hinges on fostering a competitive habitat where both defense technology companies and small businesses can thrive. This requires addressing the challenges faced by small businesses and creating programs that encourage innovation and scale.