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AnalysisInterpretation of the news based on evidence, including data, as well as anticipating how events might unfold based on past events
Eisenhower called it the ‘military-industrial complex.’ It’s vastly bigger now.
Here are four things to know about this transformation.
By Daniel Wirls
June 26, 2019 at 7:00 AM EDT
When two giant Pentagon contractors — Raytheon and United Technologies — proposed to merge into Raytheon Technologies, it hit the headlines. President Trump said he was “a little bit concerned” that the merger would dampen competition in the defense industry. Coincidentally, Congress was at the same time debating the administration’s request for substantial increases in military spending — particularly in weapons procurement and research and development.
We used to call the nexus of private interests and national defense the “military-industrial complex.” But that Cold War term no longer fits. “Industrial” does not capture the breadth of the activities involved. And “military” fails to describe the range of government policies and interests implicated. Over the past two decades we’ve seen transformations that include new government reliance on private security firms, revolutions in digital technology, a post-9/11 surge in the number of veterans, and the creation of the Department of Homeland Security (DHS). What we have now could be called a “National Security Corporate Complex.”
Here are four things you need to know about this transformation.
1.President Dwight Eisenhower coined the term, and it stuck
In the heyday of the Cold War, with corporate giants bending metal for the Pentagon in its titanic competition with the Soviet Union, President Dwight Eisenhower coined the phrase as part of a famous warning about the unprecedented “conjunction of an immense military establishment and a large arms industry.”
Eisenhower was concerned about the potential influence of industry over government policy and budgets. Since then, analysts and pundits have used the term to suggest that arms manufacturers unduly influence lawmakers in voting on the size and nature of military spending, including decisions about war and peace.
Before September 11, 2001 and the resulting military actions in Afghanistan, Iraq, and elsewhere, the Department of Energy (DOE) was the only executive branch department other than the Pentagon with major military contracts. DOE was involved because it built and dismantled nuclear warheads.
We can see how, post-9/11, more agencies got involved in national security contracting. I used federal contracting data to measure the changes from 1981 to 2018.
As you can see, much of the jump in post-9/11 spending comes from the creation of the Department of Homeland Security in late 2002 and early 2003. Before DHS was created, some of that contracting was already being done by the agencies brought together to form the new department, particularly the Coast Guard. But the scope and amount of DHS contracting increased dramatically — averaging nearly $14 billion a year from 2005 onward.
But two other departments also expanded their contracting substantially after 9/11. In the 1990s, the State Department had an average of under $700 million in contracts per year in national security related matters. From 2009 onward, that average jumped to $8.4 billion a year.
But the most stunning increases in both overall budgets and contracting came from VA. Few Americans would guess that from 2001 to 2011, VA budget grew faster than the Pentagon’s — 271 percent compared to 240 percent — even if the Pentagon includes its extra spending for the wars. Part of VA’s growth came in contracting. In the 1990s, VA had contracted out under $2.4 billion in work per year in the 1990s. From 2009 onward, VA contracted out nearly $20 billion of work each year.
3. Defense contracting extends far beyond the purchase of weapons
As national security contracting has ramped up across government agencies, we’ve also seen a change in the focus of these contracts. During the wars in Iraq and Afghanistan, a great deal of media attention focused on contracts with private security firms like Blackwater and logistics firms like Halliburton. Such “privatization” of military force continues, but it is only part of the story.
The government also expanded its outsourcing of military and veterans’ health care. Three of the top 15 Pentagon contractors were health care corporations, including two that were in the top five for VA.
National security departments further expanded their contracting in information technology, for tasks ranging from the prosaic, like bookkeeping, to the exotic, including cyberwarfare and artificial intelligence. That work went both to traditional arms-making giants such as Lockheed Martin and General Dynamics, and also enterprises such as Booz Allen Hamilton and SAIC that specialize in such work.
As a result of the government’s expanded spending on national security, many corporations now have sizable contracts with more than one federal agency. Lockheed Martin and General Dynamics — and perhaps the new Raytheon Technologies — have become diversified “Walmarts of war,” as some researchers call them, delivering a wide range of goods and services to various parts of the federal government. The Pentagon’s top contractor, Lockheed Martin, has been a major contractor for VA and DHS. General Dynamics was fourth among Pentagon contractors, second for DHS, and third for the Department of State.
Large IT specialists also contract across departments. Booz Allen Hamilton, for example, was the government’s 14th largest contractor in 2018, ranking 19th for the Pentagon, 7th for VA, and 32nd for DHS. Engineering giant Fluor Corporation was in the top 15 for Defense, DOE, and DHS. Other examples include CACI, Jacobs Engineering, and Leidos Holdings. And of course, several health care companies do business with VA and Pentagon.
What does all this mean?
Some observers argue that the general decline in overall military spending and weapons procurement after the peak of the recent wars — before the Trump administration increased that spending — meant the U.S. no longer had to worry about the influence of a military-industrial complex.
But focusing narrowly on weapons procurement misses the bigger picture. Since 9/11, an increasingly diverse array of firms have a significant stake in federal national security spending. Those funds now flow from a large portion of the federal government and into many sectors of the U.S. economy. If anything, Eisenhower’s complex has become more complex and potentially influential.