Bridging the Knowledge Gap: Understanding the Relationship of Corporate Finance and Defense Procurement

Abstract

The purpose of this study is to provide the acquisition workforce (AWF) with an understanding of industry operations and a tool for assessing a company’s capability and capacity. This study utilizes publicly available financial information and defines how a number of ratios can be used to reduce asymmetrical information that occurs within a principal–agent relationship. We examine the defense industry’s strategic level corporate financial objectives and incentives and seek to understand how this impacts the government’s procurement decisions. Finally, we make recommendations on possible ways this information can be infused with current AWF training and strategies, as well as ways this information can be utilized in future policy and acquisition strategies.