ABSTRACT
This chapter explains how even the nexus of contracts paradigm—with its microeconomic underpinnings, contractual understanding of organizational relationships, and decidedly liberal bias—can advance a view of corporations in which actors other than shareholders and managers have legitimate control over corporate resources. It focuses on the defense industry to develop this argument. The chapter shows that the law fails to react to defense contractors' multifiduciary structure and, more normatively, why the law should recognize that managers of defense contractors have responsibilities to other important corporate stakeholders. It examines the organizational structure of large defense contractors that has evolved through years of government procurement. The chapter also focuses on the problems associated with setting specifications and assigning costs in uncertain technological, political, and military environments, as well as the lack of real competition among bidders. It describes the multifiduciary nature of publicly traded government contractors, who must satisfy the conflicting goals and time horizons of shareholders and the public sector.
