The Bargaining Power of Buyers in the Aerospace & Defense Industry

Pricing strategy: When bidding for the government contracts, the A&D companies have to assess and anticipate how other competitors will respond to the Request for Proposal (RFP), which contains the details of the technical and non-technical requirements. In the lowest price, technically acceptable or LPTA contract, companies bid as lowest price as possible while maintaining the acceptable profit margin threshold for their operations. In order to determine the lowest price point that qualifies a company to win the contract and produces the highest profit as possible at the same time, not only does a company has to know its own profitable price point, it has to also anticipating how low other companies will bid the contract. For example, Company A has been trying to break into cybersecurity space in the past few years. However, it hasn’t been successfully in any of the previous bids. Contract XYZ is a large cybersecurity contract that will allow Company A to start gaining recognition as a prime

At the height of the war in 2007, there were about 190,000 armed and unarmed contractors compared to 160,000 US troops. During the war, these contractors served various purposes such as logistical support and the security of convoys and bases. Moreover, “ about 199,783 contractors were employed by the US in Iraq and Afghanistan in fiscal year 2010”, which truly demonstrates how far the contracting business has come in the United States in less than a

The Truth in Negotiations Act was passed on December 1, 1962 requiring government contractors to submit cost or pricing data if the procurement met specific requirements in order to establish that the offer is fair and reasonable. The history of The Truth in Negotiations Act will set the stage for its significance in the twenty-first century. Prior to World War II, the United States government conducted its bidding process for procurement in an open bid environment. What was required for a bid was a complete description of the requirement, two or more suppliers capable and willing to complete the requirement, a selection based on price competition and sufficient time to prepare a complete statement of the government’s needs and terms.

The terrorist attacks on September 11, 2001 shook the United States in a profound way, deeply upsetting the national perception of safety within U.S. borders. No industry or sector of the economy felt the impacts of these events more than the airline industry. Both the immediate reaction to the attacks and the long-term repercussions have negatively affected the industry. Today’s airline industry is much different than it was prior to September 11. There is a much smaller work force, more low-cost carriers, more security and more fees associated with flying.

Observers do not need to look far for the signs of a military-industrial complex that has become too powerful and involved in politics. The Army has repeatedly attempted to halt the production and spending on new tanks. The Air Force has spent almost $400 billion on the F-35 Joint Strike Fighter program, nearly double the initial estimate. If the relationship between civilian and military leaders is to be mended, leadership decisions must not be influenced by the military-industrial

Dams sector is a vital part of the nation’s infrastructure and offers a wide range of economic, environmental, and social benefits. The asset composed are hydropower generation facilities, navigation locks, levees, dikes, hurricane barriers, mine tailings, industrial waste impoundments, and other similar water retention and water control facilities. Defense industrial base sector, includes domestic and foreign entities, with production assets located in many countries. This sector is the worldwide industrial complex that makes possible research and development, as well as design, delivery, production, and maintenance of military weapons systems, subsystems, and components or parts, to meet U.S. military requirements. With more than 100,000 defense industrial companies and their subcontractors who carry out under contract to the department of defense, and government-owned/ contractor-operated and government owned/government-operated facilities. Critical manufacturing emergency service sector, as direct attack on or disruption of certain elements of the manufacturing industry could disrupt essential functions at the national level

The escalation of conflict is not the only problem the increased number of private military contractors bring. These contractors have a different object and priority than the stationed troops in conflicts. The contractor's’ number one priority is protecting their asset, as the private corporations know that if the important figure they are assigned to protect gets captured or killed, it would be devastating for the business and most likely they would lose the funding the government provides. Since the priority of the contractors is to keep the asset safe, they will often be very aggressive, securing perimeters and stopping any vehicles that get too close. There has been many cases where the private contractors shoot at cars to stop them,

The third issue that was discussed in these articles is a strong disconnect between what is being planned vs reality. Following 9/11, Pentagon budget went up significantly to justify the ongoing fight against global terrorism. However, if we look carefully, it is obvious that a higher percentage of the defense budget is going to fund Cold war era programs and may reduce readiness for Asymmetric warfare we are currently experiencing or may experience more in future. Additionally, unreliable information coming from DOD’s accounting system makes it extremely difficult to generate future force projections and cost estimates based on past and present status of expenditures. Overall, it creates an unrealistic ballooning defense budget that is not economically sustainable.

One of the most notable impacts airplanes has affected not just America, but the world as a whole. Aviation keeps the whole world connected and in touch. One of the ways aviation have an effect on the economy today is by providing jobs for the world. There are 56.6 million jobs worldwide associated with aviation in some way. If the airplane industry were to become a country, it would be the nineteenth most populated country on the earth (“Social and Economic Benefits”). Airplanes also have made an impact on the economy by allowing people to travel throughout the world. This has empowered businessmen to establish better relationships with others

Lockheed Martin is an American aerospace multinational that also specializes in defense, security and advanced technology industries. The corporation was instituted in 1995 following the merger between Lockheed Corporation and Martin Marietta (Yenne, 2000). The corporation is based in Bethesda in Maryland with global centers that specialize in different aspects of the corporation’s many operations. Currently, the corporation employs over 120,000 employees scattered across the world. Presently, Lockheed is one of the largest defense contractors in the world and enjoys almost unlimited orders across the world.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

America holds the largest Aircraft industry in the world. The industry greatly depends on the advancement of the technology for its growth. The industry on the hand has the largest aircraft manufacturing sector around the globe.

The DoD communicated to Congress that the JSF program was essential to national security and needed to continue. DoD was not the only corner of the iron triangle to influence Congress’s decision to continue the program. Lockheed Martin and various lobby groups highlighted the fact that the JSF program supported 133,000 jobs many of them subcontractors and parts suppliers that were spread across 45 states. Moreover, when full rate production was to begin, the employment figure would grow to well over 250,000. With constituents in 45 states tied to the JSF program it was a given that Congress would decide to continue with the JSF program. It is unlikely that Lockheed Martin having subcontractors and parts suppliers spread throughout 45

suppliers. The airline industry in the wake of the terrorist attacks in 2001 could be considered as an

On the other hand governments support aviation industry by building airports, roads and hotels near airports, because they recognize this industry as an important ingredient for economic well-being. In addition governments arrange security at the airports to ensure safe journey. The terrorist attacks of September 11, 2001 have had negative implications for the industry. Over the years, all the airlines have changed their routes, marketing tactics and prices; they are also making an effort to reduce the fear and negative image associated with air-planes. Governments have imposed strict security checks on air travel passengers in order to avoid any unforeseen terrorist activity.