Since the end of the Cold War, the Pentagon has been trying to balance the desire to maintain competition in key portions of the defense industry where there is only enough business for one supplier.
In the case of submarines, for example, the current arrangement is to have the back half of the subs built by Northrop Grumman in Newport News, Va., while the front halves are constructed by General Dynamics in Groton, Conn. Then they alternate in putting the two together. The arrangement adds significantly to the cost of the subs but now both yards are available should the need arise to quickly ramp up production.
And then there's launch rockets. The Pentagon says it can't afford to rely on just one model of rocket to launch its spy and communications satellites, in case a launch failure puts that supplier out of commission for a year or two. But with the commercial telecommunications market on its back, Boeing and Lockheed Martin calculate they'll need a $1 billion subsidy over the next five years to keep them running in the black. The new Bush budget allows for $538 million, and the Air Force last week said it will agitate for the rest.