Despite having the world’s most powerful economy and dominating the global defense industry, the United States may be dangerously close to losing its next major war, not due to a lack of funding or technology, but because of its own bloated defense-industrial complex.
Experts and recent studies warn that U.S. defense dominance, centered on mega-contractors like Lockheed Martin, Boeing, and Northrop Grumman, has become inefficient, risk-averse, and slow. Once a strategic asset, this concentration of power is now stifling innovation and driving up costs. As of 2023, the top five global arms producers were all American firms, but this monopoly-like structure has reduced competition, slowed responsiveness, and undermined technological advancement.
A 2024 CSIS study revealed that 86% of the Department of Defense’s major acquisition programs are now controlled by traditional defense-only firms, leaving little room for commercial innovation. In contrast, adversaries like China, Russia, and even Iran are fielding faster, cheaper, and more adaptable systems. Not only that, a February 2022 study by the Department of Defense (DOD) found that after decades of consolidation, the number of defense prime contractors had shrunk from 51 to fewer than 10.

The Pentagon’s reliance on cost-plus contracts shields firms from financial risk, encouraging overengineering and inefficiency. The F-35’s $1.7 trillion lifecycle cost, for example, exemplifies a system that prioritizes perfection over practicality — a luxury in modern warfare. Cheaper, functional alternatives from rivals show the advantages of leaner production models.
Defense experts argue the U.S. must overhaul its acquisition process to prioritize speed, modularity, and competition. The Biden administration appears to agree, recently directing reforms to improve agility and effectiveness. However, entrenched interests and monopolistic inertia present formidable barriers.
If the U.S. wants to remain a global military leader, it must embrace radical defense reform — not tomorrow, but now. Without it, America risks losing future wars not on the battlefield, but in the boardroom.