ABSTRACT
This chapter shows the close relationship between the military establishment and the major military contractors. It helps to generate pressure to reduce the bureaucratic approach to military procurement and thus to reduce the close relationship between government and the private contractors. The close, continuing relationship between the military establishment and the major companies serving the military market is changing the nature of both the public sector of the American economy and a large branch of American industry. Cost-plus contracting by the military establishment has shifted much of the risk bearing from the industrial seller to the governmental buyer. The most pervasive way in which the Department of Defense assumes the management decision-making functions of its contractors is through the procurement legislation and regulations governing the contracts it awards. The long-term impact of the governmental relationship on the private contractors may be examined by comparing the major defense companies with large industrial corporations of approximately similar size.
