Date of Award

3-24-2016

Document Type

Thesis

Degree Name

Master of Science

Department

Department of Operational Sciences

First Advisor

William Cunningham, PhD.

Abstract

Since World War II, competition in the defense industry has fallen by over 90 percent. Over half of contracts currently executed by the United States Navy and Air Force are awarded without any competition. With the recent defense budget cuts, and an extended period of reduced defense spending ahead, more of which is going to sustainment and overhead than ever before, each year prime contractors are fighting over an even smaller piece of the procurement pie, which could have a deleterious effect on national security if these contractors go out of business or further consolidate through mergers. This study used data from the Federal Procurement Data System and the Securities Exchange Commission to track 13 of the DoD’s top 100 contractors from 2010 through 2015 to determine if a relationship exists between this reduced procurement spending and the financials indicators of the tracked companies. Three of the six models developed showed a relationship between procurement spending and financial indicators at the .05 significance level: those of Price-to-Earnings ratio, revenue, and revenue growth. The results of this study give cause for concern about the ever condensing defense industry and suggest that increased care be taken to ensure that the existing base of contractors be cultivated though strategic management of procurement funding.

AFIT Designator

AFIT-ENS-MS-16-M-115

DTIC Accession Number

Pending

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