Good business decisions should not require subsidies. In this age of corporate downsizing, military contractors should not be exempt from marketplace pressures to keep overhead costs low. If market conditions require defense contractors to merge in order to survive, then they should do so. It is nonsense to argue that because those mergers may save taxpayers money, taxpayers should subsidize them. Taxpayers should not be forced to pay private firms to make the good business decisions necessary to stay afloat.
Current policy subsidizes bad business decisions.
Subsidies of defense contractor mergers provide yet another example of how government meddling can adversely influence decisions in the private marketplace. If two defense contractors decide that merging makes sense economically and is in their shareholders' interest, then they should do so. However, if those two firms conclude that merging would be unwise, then they certainly should not do so. Instead, the Pentagon's policy says to those two companies, go ahead and merge, we'll make the taxpayers pick up the tab. Martin Marietta's 1993 acquisition of General Dynamics Space Division is a case in point.