How a Nuclear Missile Monopolist Is Getting a Quarter Trillion Dollar Pentagon Contract
The Pentagon and FTC allowed Northrop to monopolize nuclear missile production in 2018. Now it is in line for a $264 billion sole source contract, unless antitrust enforcers step.
|Matt Stoller||Mar 23||6||4|
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I’ve written a bit on the Northrop monopoly over the nuclear missile business, the result of a merger between Northrop and rocket engine maker Orbital ATK. Once Northrop got its hand on the dominant rocket motor producer, it denied competitors access. And voila, Boeing dropped out of the bidding for the nuclear missile upgrade, and Northrop became the sole bidder.
So Northrop gets to set the price for missiles, unless Congress bargains aggressively or the FTC unwinds the merger. Let’s start with Congress. As it turns out, monopolist Northrop is a big donor to the group of Senators who support spending more money on these missiles, informally known as the ICBM Coalition.
The efforts of the ICBM Coalition have been supplemented by lobbying and campaign contributions from ICBM contractors, led by Northrop Grumman, which has received a sole source, $13.3 billion contract to build a new ICBM, known formally as the Ground-Based Strategic Deterrent, or GBSD. Current estimates indicate that building and operating the GBSD and related warheads will cost $264 billion over the life of the program, which would provide a steady flow of revenue to Northrop Grumman and associated companies for years to come.
A quarter of a trillion dollar sole source contract? Not bad, Northrop.
There is an answer, of course. Unwind the Orbital acquisition. It’s actually not that hard, since Northrop is violating the FTC consent decree it signed when buying the firm, a decree whose condition was that it wasn’t allowed to deny rocket engines to competitors.