Comment by wahern

According to a 1997 Washington Post article it happened in 1993, he didn't speak with just those two CEOs but executives from across the industry, and no company was singled out, rather he suggested for the industry generally to pursue mergers to survive large cuts to defense spending:

> The frenzy of defense industry mergers can be traced to 1993, when then-Deputy Defense Secretary William Perry invited executives to dinner. At an event now referred to as "the last supper," Perry urged them to combine into a few, larger companies because Pentagon budget cuts would endanger at least half the combat jet firms, missile makers, satellite builders and other contractors represented at the dinner that night.

> Perry's warnings helped set off one of the fastest transformations of any modern U.S. industry, as about a dozen leading American military contractors folded into only four. And soon it's likely only three will remain, with Lockheed Martin Corp.'s announcement yesterday that it plans to buy Northrop Grumman Corp. for $11.6 billion.

Source: https://www.washingtonpost.com/archive/business/1997/07/04/h...

In context I don't see anything untoward here. 1993 was also the fourth round of closures under the Base Realignment and Closure (BRAC) process: https://en.wikipedia.org/wiki/Base_Realignment_and_Closure BRAC was the systematic demilitarization of the U.S. after the Cold War, and apparently Perry was giving the industry fair warning that the process was finally and irreversibly going to bear down on their long-term sales prospects. I think it's fair to say that the Defense Department had a legitimate interest in the orderly realignment of the defense industry. It doesn't seem like he told them anything that wasn't already publicly known; rather more letting them know that there weren't going to be any 11th hour miracles.

If there's an issue here it's acting on the belief that defense contractors can only survive with enormous economies of scale given the long-term capital expenditures. But everybody believed that; and most still do. Most people still think Elon Musk and SpaceX are aberrations, and maybe they are. And nobody could have guessed 9/11 and subsequent wars, which inflated defense expenditures to well beyond Reagan's highs. (For that matter, nobody could have predicted the huge amount of assets and incredible liquidity of the modern investment world that make SpaceX possible.) If spending had remained at Clinton-era levels the reduced number of competitors may have worked out perfectly well, notwithstanding the demise of Boeing culture.