It is extremely difficult for the US government to punish top defense contractors for lawbreaking, as there are no competitors with the same capabilities.

The Department of Defense has awarded a no-bid contract extension to RTX subsidiary Raytheon, valued at up to $394 million, to maintain its AN/TYP-2 radar systems for another two years. The extension raises the total value of the radar contract to around $3 billion.

Sole-source or non-competitive contract extensions are not the norm, but they happen regularly in specific, tightly regulated circumstances. However, the announcement led to controversy, in part because Raytheon admitted to defrauding the US military in 2024, PunchUp first reported.

Two years ago, the Department of Justice (DoJ) ordered Raytheon to pay more than $950 million in fines following an investigation that found that it had overcharged the United States Air Force by roughly $11.1 million in a maintenance contract. In a separate scheme, the company had also inflated the costs for the US Army’s Patriot missiles by $100.1 million.

“Both agreements require that Raytheon retain an independent compliance monitor for three years, enhance its internal compliance program, report evidence of additional misconduct to the Justice Department, and cooperate in any ongoing or future criminal investigations,” the DoJ announced in October 2024.  

Less than two weeks after the company was ordered to pay the fine, however, the Pentagon approved a $900 million increase to the ceiling of the same radar support contract.

Raytheon Is Too Big to Fail (or Jail)

This September, the United States Navy also concluded that blocking Raytheon from future awards would not be necessary to protect federal interests, and that the RTX business would remain eligible for government contracts, despite its troubled legal history. The Pentagon has justified continuing, and even expanding, these high-cost contracts due to the fact that they are sole-source acquisitions for critical national security infrastructure, and no other defense firm or supplier is ready to step in.

This problem isn’t limited to Raytheon. In May 2025, aerospace giant Boeing was ordered to pay $1.1 billion to avoid criminal prosecution regarding the 737 Max crashes. Still, the company previously pleaded guilty to a criminal charge of conspiracy, triggering legal rules restricting (or at least complicating) federal contractor status that technically required Pentagon waivers to maintain certain programs.

Even so, in 2025 and 2026, the US Air Force and US Navy respectively awarded the company the contracts to build their two sixth-generation manned fighters, the Air Force’s F-47 and the Navy’s F/A-XX.

Boeing avoided the catastrophic, company-wide Pentagon bans through what was a combination of proactive legal settlements and specialized administrative agreements, but more importantly, its status as a critical, and even irreplaceable, national security supplier.

In the 1990s, the US Consolidated the Defense Industrial Base. Was That a Mistake?

The root of this issue is clear: the defense industrial base has experienced extreme consolidation at the top level. In 1993, the United States had 51 major defense prime contractors, but with the Cold War in the rearview mirror and drastic military spending cuts imminent, the Pentagon actively encouraged those companies to merge and consolidate to lower overhead costs. An oft-repeated tale concerns a Pentagon dinner nicknamed the “Last Supper” in July 1993, at which then-Secretary of Defense Les Aspin told defense executives that government antitrust regulators would look the other way if they chose to pursue nominally anti-competitive mergers in order to stay afloat.

As a result of those cuts, the 51 smaller companies consolidated into today’s “Big Five”: Lockheed Martin, RTX, Boeing, General Dynamics, and Northrop Grumman. These companies are still the largest federal contractors, accounting for more than 20 percent of total US government procurement dollars. In 2023, the US government gave $31 billion to RTX, or around 4 percent of its total contracting capital.

In addition, thousands of mid-tier and smaller suppliers have exited the defense market over the last decade due to heavy regulatory compliance, low profit margins compared to commercial sectors, and strict data rights. Even as the DoD continues to invest billions to spur growth among non-traditional and commercial tech companies that can produce dual-use technology, the new entrants lack the heavy manufacturing capacity of the Big Five.

About the Author: Peter Suciu

Peter Suciu regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. He has contributed to dozens of newspapers, magazines, and websites over a 30-year career in journalism, including Forbes and Clearance Jobs. He is based in Michigan. You can follow him on Twitter: @PeterSuciu. You can email the author at Editor@nationalinterest.org.

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