Defense contractors have an effective monopoly on defense procurement, and can therefore charge what they wish. Other times defense contract ors engage in collusion and decide who will make the low bid. They then all make high bids and the Pentagon is forced to choose the lesser of evils. These monopolies enable defense contractors to profit from sloth, as the longer it takes them to make a weapons system the more they can charge. An extreme example is when Hughes Aircraft built the Maverick missiles.
Monopolies also allow defense contractors to draw the government into nearly endl ess spending.
They can take advantage of their situation by continually raising costs once a government contract is signed. This is because the government has nowhere else to go for the product and generally refuses to abandon a project that has already b een started, even if the initially projected costs are inflated tremendously. Weapons are often procured not out of necessity, but to preserve a corporation suffering financial difficulties. Further, the government often protects defense contractors from the rigors of the free market through large loan guarantees, biased contract a wards, or vastly overpriced procurements. Defense contractors heavily lobby Congress and the executive branch, providing lavish gifts to key decisio n-makers.