Studies of the Defense Contracting Process

Abstract

Participation by private firms in the design and manufacture of weapons systems has increased enormously since the beginning of World War II. The increase has resulted both from a step-up in the amounts expended on defense as well as from the transfer of the major responsibility for defense production from public agencies to private firms. In 1939, expenditures for defense by the federal government were only about a billion dollars and constituted only i.2 per cent of the Gross National Product (GNP). At their peak during World War II they were $8I billion and amounted to thirty-eight per cent of the GNP. In 1948, even at their lowest postwar point, they were $ii.8 billion or 4.5 per cent of the GNP. Since I955 they have amounted each year to between nine and ten per cent of a GNP now nearing the $600 billion mark.' Before World War II, arsenals operated by the federal government produced almost all Army ordnance items and a good share of Navy ordnance and ships. The only important class of articles produced exclusively by private firms was aircraft. During World War II, the bulk of weapons-making in all fields shifted to private firms and has stayed there. By 1958, government-owned and operated facilities comparable to those of private defense contractors accounted for less than ten per cent of the resources devoted to weapons-making.2 Today a very substantial portion of the efforts of some of the largest firms in the country is devoted to contracts for products with a governmental end use. Large firms such as Republic Aviation Corporation, McDonnell Aircraft Corporation, and Grumman Aircraft Engineering Corporation sell less than ten per cent of their output to customers other than the government and its prime contractors.3 During the last few years, as might be expected, studies and analyses of the implications of these important changes in the defense procurement process have begun to appear in ever increasing numbers. Considering the social and economic importance of the subject, it is surprising that there were so few significant studies until quite recently. The subject has finally begun to command increasing attention, however, from a variety of academic disciplines as well as from the various governmental